Contract analysis

I. OVERVIEW OF THE COST-SHARING ARRANGEMENT 1.1 CSA Background and Structure PPC and PBI are parties to a Cost-Sharing Arrangement (the "CSA"), which was executed and became effective on July 1, 2012. The CSA governs the sharing of costs related to intangible development activities ("IDAs") between the two controlled participants, and allocates the rights to exploit resulting intangible property on a territorial basi

II. COMPOSITION OF THE QUALIFIED R&D COST POOL (TY 2017–2020) 2.1 Aggregate Annual Qualified R&D Costs For each of the tax years under examination, the aggregate qualified R&D costs included in the cost pool subject to sharing under the CSA are set forth below: These figures represent the total cost pool subject to sharing under the CSA, as defined in Section 4.2 of the CSA agreement and consistent with the definitio

III. COST-SHARING ALLOCATION METHODOLOGY — REASONABLY ANTICIPATED BENEFITS 3.1 Governing Standard Under Treasury Regulation § 1.482-7(e), each controlled participant's share of intangible development costs must be proportional to its share of the reasonably anticipated benefits ("RAB") attributable to the intangible development activities conducted under the CSA. The regulation requires that the RAB shares be determi

Section 6.4 of the CSA contains a true-up mechanism designed to reconcile any variance between the projected revenue splits used to calculate each year's cost-sharing percentages and the actual revenue splits realized in each participant's territory during the year. The true-up operates as follows: (a) At the end of each calendar year, PPC's corporate finance team calculates the actual revenue split between the PPC T

IV. SUPPORTING DOCUMENTATION PRODUCED The following documents and materials are produced herewith in response to IDR No. 6: Attachment 6-A: Detailed R&D Cost Pool Breakdown (TY 2017–2020). This attachment consists of a Microsoft Excel workbook containing a detailed breakdown of the qualified R&D cost pool by cost category (direct R&D personnel costs, CRO fees, clinical trial costs, laboratory and equipment costs, reg

V. PRIVILEGE RESERVATION PPC and its counsel respectfully reserve all rights to assert the attorney-client privilege, the attorney work-product doctrine, and the tax practitioner privilege under IRC § 7525 with respect to any documents, communications, analyses, or other materials that have not been produced in connection with this response or any other response in this examination. PPC is maintaining a privilege log

VI. RESERVATION OF RIGHTS PPC reserves all rights to supplement, amend, or clarify this response at any time, including but not limited to the right to provide additional documentation, revise the analyses set forth herein, or present additional arguments in support of PPC's transfer pricing positions. This response is based on information currently available to PPC and its advisors, and PPC does not waive any right