Innovation is the life source of Life Sciences. But strategic and meticulous planning is key to commercial success, especially when entering a new regional market.
Plan early for success
Operationalize to commercialize – that is what Life Sciences companies need to do to succeed in Europe. A market entry analysis, preferably early in the clinical phase, will help them decide on the best route to market. Depending on the company’s size, product and ambitions, the options are out-licensing, direct launch or a combined approach. Out-licensing can save problems on the backend and shed sizable chunks of risk from the business model, but evidence points to better stock price performance for companies that go it alone. Combining elements of both can secure a company the best – and worst – of both models (webcast).
Five key work streams
KPMG has identified five key work streams to build a successful operating model:
- Market access, pricing and reimbursement – National authorities are free to set the prices of medicinal products and to designate the treatments they wish to reimburse under their social security systems.
- Supply chain, financial management and IT – Expanding to Europe for the first time is an opportunity to set up an efficient distribution and supply chain.
- Regulatory and quality – The pharmaceutical industry is heavily regulated, with the entire lifecycle of products subject to various rules and regulations.
- Launch sequence and site selection – A company can only start commercializing its product(s) once certain steps have been taken.
- Tax model and legal structure – Diligent tax planning can significantly leverage the target operating model.
Developing a tailored outsourcing concept for each of the work streams can help balance speed, efficiency, cost, return and risk. Wasting time in a product’s patent life can leave the door open for competitors. But more importantly, a launch delay also means that the (quality of) life of the patients is at stake.
Expanding right into Europe
Europe, the second-largest market for medicines in the world after the US, is an attractive prospect for international Life Sciences companies looking to expand their business abroad. Although considerable progress has been made in bringing Europe closer together to offer a more unified business environment, the European Union (EU) still presents a variety of general challenges, from numerous official languages to a complex regulatory environment. The Life Sciences industry now also faces added uncertainty in run-up to Brexit. Meticulous planning is more important now than ever.
European potential beyond the EU
Not all countries with an important healthcare market are part of the EU, however. Switzerland, Norway and – post-Brexit –the United Kingdom define their own regulations related to marketing of healthcare products. Nevertheless, it is in the interests of these countries to overlap with EU rules. Many international Life Sciences companies have already discovered the benefits of locating key value drivers and certain subsidiaries in Switzerland, for example, or of applying for fast-track Swiss licenses that are recognized in the EU.