How to ‘ACE’ geographical expansion in Europe
Biotech-in-a-box™️ aims to provide a ‘one-stop shop’ for small-to-medium size life sciences companies to de-risk the scaling up of their business by leveraging Deloitte’s portfolio of capabilities.
Biotech companies are now at the forefront of innovation in the search for new cures. They are responsible for about 70 percent of global clinical trials (of which 42 percent are in partnership) and for the development of nearly half of FDA-approved medicines in 2018. However, they face substantial challenges to the development of their business, such as securing IP rights, managing R&D, raising funds (including from an IPO), launching a product or product portfolio, and expanding geographically. Next generation therapies (such as gene and cell therapies) add another layer of complexity to managing regulatory, supply chain and patient concerns.
Geographical expansion into Europe
Typically, Biotech companies focus their limited resources on either the US market or their market of origin. A critical first step for global expansion is the entry into Europe, which accounts for over 20 percent of the global pharmaceutical market. Europe however is a complex market with separate national healthcare systems and reimbursement processes.
Business success in such a complex environment involves going beyond traditional thinking about geographical expansion, and requires a clear understanding of the unique requirements from a development, manufacturing, distribution, commercial and operational perspective.
Advantages of Switzerland for Biotech companies
‘ACE framework’ – a three-step game plan
Based on our experience in helping Biotech companies navigate geographical expansion, we have identified three essential steps:
- Assess potential: Agree on guiding principles for the European business; and assess the commercial opportunities, route-to-market options, and associated costs across the European markets
- Consider options: Select the most appropriate go-to-market options using a set of strategic criteria (e.g. investment required, time to value, complexity to manage, resources required), align on the priority factor(s) for decision-making, and define the cut-off points for a go/ no-go decision
- Establish presence: Choose the best route to establish a presence in Europe successfully, which could be either via a partnership or licensing route, or via the company choosing to go alone
European entry ‘must haves’
Before making a decision on which go-to-market route to follow, it is important to understand what is required to launch products in Europe e.g. without a partner, including the ‘must-haves’ for commercialisation in the European market, associated costs, required investment for business activities (such as running marketing campaigns) and hiring FTEs. It is also crucial to consider all the organisational functions in the business and determine what contribution should be required from each when it comes to the build-up of the European operation. For that purpose, Biotech executives should ask themselves the following questions: