Despite an increasing amount of criticism from Washington lawmakers, a drug maker officially left the U.S. and opened its corporate offices in Ireland in a move that was designed to lower its taxes.
Horizon Pharma closed its acquisition of $587 million for Vidara Therapeutics International a pharmaceutical company based in Ireland. The deal allows Horizon to move its corporate headquarters officially over to Dublin
The announcement on Friday was on the same day that two U.S. Senators, Illinois’ Dick Durbin and Ohio’s Sherrod Brown, both who are Democrats, unveiled the most recent legislation aimed at ending the exodus of companies from the U.S. to countries that are more tax friendly.
Durbin called the corporate decision terrible by the companies and the U.S. must change its tax policies to make a move more discouraging. The issue, said Durbin is gaining momentum and people have become unhappy with it.
Horizon is 1 of 14 U.S. companies that have completed a move of their headquarters since the start of 2012. Eight others announced they had plans to do the same, including AbbVie, Inc based now in Chicago.
The rush to change tax domicile known now as corporate inversion, is fueled by the company’s wanting to escape the 35% rate of corporate income tax paid in the U.S., the highest anywhere in the developed world.
CEO of Horizon, Tim Walbert, who will stay in the U.S., estimates the tax rate of the company will fall to the low 20% range and possibly lower from the high 30% range prior to the move.
Leaving to reopen shop in Ireland will level the company’s playing field in terms of a broader acquisition strategy.
Horizon, which announced the acquisition of Vidara on March 18, looks at acquiring drugs that are lesser known with sales annually of under $2 million and supporting them with an aggressive marketing campaign to increase revenues.
Often times it competed against competitors that were foreign domiciled for the drugs, which the CEO said gave competitors much better edge due to lower rates of corporate taxes that were paid.