Sweden has long been recognized as one of the most innovative nations in the world, with a pharmaceutical sector that delivers global impact well beyond its scale. According to Statistics Sweden, the industry invested 13,6 billion SEK of its own funds into research in 2023, with a total investment of 18,1 billion SEK when including external funding1.
These investments are crucial not only for advancing science but also for maintaining Sweden’s competitiveness and economic growth. With the government’s latest national investment in research and innovation, placing a strong emphasis on commercialization2, there has never been a better time for pharmaceutical companies to optimize their funding opportunities. Yet, many companies are still leaving significant savings untapped by not fully leveraging R&D tax incentives.
A sector dominated by small but ambitious players
While global names are part of the Swedish pharmaceutical landscape, the sector is fundamentally composed of small and micro-sized companies:
- 71% of pharmaceutical companies are micro-sized, with fewer than 10 employees3.
- 93% of pharmaceutical companies have fewer than 49 employees3.
These companies drive much of Sweden’s innovation pipeline. In fact, on average, 75% of employees in micro- and small pharma companies are directly engaged in R&D3. But their limited size also creates challenges. Without the supporting infrastructure of larger corporations, small firms often struggle to dedicate time and resources to complex administrative processes like R&D tax claims.
The reality is that the lack of documentation and systematic processes, not the lack of R&D itself, is what prevents many smaller companies from securing the tax relief they are entitled to.
Financing: the core challenge – and a major tax relief opportunity
According to SwedenBIO’s 2023 report, 79% of pharmaceutical companies point to financing as their biggest challenge3. Simultaneously, 64% are looking to grow their workforce, despite financial constraints3. This points to a key opportunity: Companies can benefit from savings of up to 63,7% on employer social security contributions (arbetsgivaravgifter) for R&D employees, significantly lowering operational costs.
For growing companies, these savings can accelerate timelines, enable additional hiring, and ensure continuity in development cycles, if they can identify and implement the right strategies to secure these incentives.
From molecule to market – where R&D incentives apply, and why expert support matters
Drug development is a multi-phase, high-risk journey. Each stage, from discovery to manufacturing, can potentially qualify for R&D tax relief. However, eligibility is not automatic and depends on how the activities and results are assessed, documented, and communicated to tax authorities. Stages in the drug development that could potentially be eligible for the tax relief are:
- Early discovery & preclinical development: The search for new molecules, proof-of-concept experiments, and safety testing are at the heart of generating new knowledge.
- Clinical trial: Initial human studies to assess safety, dosage tolerance, and early signs of efficacy may include structured experimentation and the generation of new data with uncertain outcomes.
- Formulation and scale-up: Technical refinements to drug formulations, adaptations of production methods, or the development of quality-assured manufacturing processes can present developmental hurdles that require investigative work.
Ultimately, the potential for R&D incentives spans the entire drug development pipeline, but realizing that potential requires more than simply performing innovative work. It demands the ability to differentiate between routine processes and qualifying R&D, to navigate evolving eligibility criteria, and to translate complex activity into structured, compliant documentation. This is where expert support proves critical, helping companies capture the full value of their innovation by transforming scientific progress into financial advantage.
How Leyton Sweden can help
With deep expertise in both R&D and regulation, Leyton specializes in helping pharmaceutical companies unlock their full potential through the R&D tax incentive.
We understand that for micro- and small-sized companies, time is the most valuable resource. The process of identifying eligible activities, gathering documentation, and defending claims can feel overwhelming. That is why Leyton takes on the heavy lifting, allowing innovators to focus on what they do best: developing life-changing therapies.
At Leyton, we help clients navigate key challenges that are often underestimated:
- Assessing project eligibility: Not all R&D activities clearly fit the criteria. Leyton helps identify which parts of your work qualify, even those that might otherwise be overlooked.
- Compiling the right documentation: We guide you in structuring technical justifications, cost tracking, and deliverable summaries that meet the expectations of the Swedish tax agency.
- Saving time: Compliance work can drain your internal resources. We free your team to focus on science, not paperwork.
- Facilitating communication with the Swedish tax agency: We know how to present your case clearly and defensibly and support you during audits.
Whether you’re a spinout from academia, a biotech scaling up production, or an established pharma innovating a new delivery pipeline, Leyton adds value by transforming difficult bureaucratic processes into opportunity-driven outcomes.
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