Drug discovery, diagnostics & lab automation
Estimate your credit →Discovery, assay development, scale-up, and device design are inherently experimental, with substantial uncertainty about efficacy, performance, and reproducibility.
The credit is calculated on qualified research expenses (QREs) — primarily wages for engineers and technical staff who spend time on qualifying activities, plus supplies, cloud/compute, and 65% of qualified contract research.
The table below lists the business components that most often qualify, a common example, and the technical uncertainty that makes each one defensible.
| Business component | Example | Technical uncertainty |
|---|---|---|
| Drug discovery & formulation | Novel compound, formulation, or delivery system | Will the candidate achieve efficacy and stability? |
| Assay & diagnostic development | New assay or point-of-care diagnostic | Can it hit sensitivity and specificity targets? |
| Bioprocess & scale-up | Fermentation or cell-culture scale-up | Will the process scale while holding yield and purity? |
| Medical device development | Implant, instrument, or wearable | Will the device meet safety and performance under use? |
| Lab automation & software | LIMS, automated screening, analysis pipeline | How to automate workflows reliably and reproducibly? |
| Analytical method development | New chromatography or mass-spec method | Can the method reliably quantify the target? |
| Computational / genomic biology | Variant-calling pipeline, predictive model | Which model or pipeline yields valid predictions? |
| Process & manufacturing tech | New sterilization or packaging approach | Will it meet sterility and shelf-life requirements? |
Wages for time spent on qualified research may count toward your credit. Percentages depend on facts and must be documented.
Illustrative example using sample figures. Your actual credit depends on your facts; see Form 6765 and consult a tax professional.
The IRS requires qualifying research to satisfy four tests. Here's how they typically map for this industry:
The activity aims at improving a product, process, software, or technique used in the business — not just a business outcome.
The work relies on principles of engineering, computer science, biology, chemistry, or another hard science to resolve uncertainty.
There was genuine uncertainty at the outset about whether — or how — the component could be built or improved.
The team evaluated alternatives: A/B tests, prototypes, benchmarks, simulations, or iterative design-build-test cycles.
Most companies underestimate what they can claim. Our study covers every qualifying role, every component, and every year still open for amendment.
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