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Why Now Could Be the Right Time to Reconsider Your Planning For Europe Strategy


Emma Thorp and Mel Walker, PhD, of RBW consulting discuss European strategy for US biotechs.

There are many reasons why even the most innovative and entrepreneurial US biotech firm might choose to out-license its product or partner with an existing European company instead of going it alone. The European market is without doubt complex, and failing to appreciate this can be costly.

However, by delaying consideration of this region, US biotech companies can risk losing out on the longer-term opportunities that come with establishing a commercial footprint in what is still collectively the world’s second-biggest market for pharmaceuticals. It also means they could miss out on setting themselves up for future partnerships. This may include creating value for future exit, increasing their attractiveness to investors and their stock price if public, and, of course, opening up the potential for continued global expansion.

Here, Emma Thorp, chief growth officer at RBW Consulting, and Mel Walker, PhD, an established healthcare leader and nonexecutive board director at RBW Consulting, discuss why US biotech companies should think again about their European strategies and how to best prepare.

Mel Walker, PhD

Mel Walker, PhD

Pharm Exec: What puts off US-based companies from launching in Europe under their own steam?

Walker: Financial resources are often limited at small biotechs, so it’s understandable that tough choices have to be made about investment priorities, and, of course, limited cash runways and fear of failure are strong disincentives. We’ve seen some high-profile failures and pullbacks from Europe in 2021 as a result of market access challenges, plus there’s been a lot of hype about the biotech bubble starting to burst at the beginning of 2022. That’s not helping the case.

Companies will often start thinking about their European strategy when they are at the stage of building commercial operations. This is much too late. I’ve seen firsthand the negative consequences of commercial planning taking a back seat to clinical development. Even if the intention to focus purely on the US is fixed at an early stage of a business plan, in order to maximize company valuation there is some merit in making decisions as if you have a European launch in your sights. Keeping your options open is never a bad strategy as the market environment has shown itself to be subject to change. While the US seems to be avoiding the worst scenarios relating to drug pricing for now, factoring in European requirements will help to hedge risks around US commercialization when changes do occur.

Pharm Exec: What are the big shifts happening right now that might throw a different perspective on the decision to launch in Europe or out-license?

Walker: Europe has historically been known as a particularly price-challenged region, requiring expert knowledge in benefit assessment, pricing negotiations, and reimbursement models—this has felt quite alien to those used to dealing with the US market. However, there is a growing globalization of this approach, which the US will not be immune to. For example, according to a Deloitte 2020 survey, US decision makers expect cost effectiveness to become increasingly important between now and 2025. In addition, we have seen a significant shift in US policy focusing on drug pricing over the last two to three years—this won’t go away as health care cost pressures mount. So what we are seeing is that the skills and knowledge that companies need to launch in Europe are becoming mandatory across the pond, too. What’s interesting is that there is a growing awareness among the investor community of this trend. That will only drive the need to address these issues earlier in the product life cycle regardless of target launch markets. How a company responds to the changing requirements will be a key consideration in downstream investment or acquisition deals.

The other interesting market shift is the Brexit effect, separating the UK from the rest so that now the priority European markets are really EU4+UK. While there are some operational differences that may add to the complexity of regulatory approvals, what is worth paying attention to is that we are perhaps seeing a greater emphasis on innovation than ever before in Europe. In some of the recent cases relating to COVID-19 therapies, we have seen the UK in particular take first-mover status when it comes to approvals compared to the US. How that will play out in the longer term is yet to be seen, but it could result in the pendulum swinging in terms of market attractiveness.

Pharm Exec: What sort of lead times are required when it comes to getting ready to launch?

Walker: As I said, there is some merit to building an element of flexibility into the planning process, but the absolute minimum lead time to ensure a product is ready to launch is at least two to three years before launch and must include consideration of payer requirements when developing the Phase III trial program. Really though, you need to start building in access considerations at Phase II because this predicates your Phase III design, and even earlier in many cases. For example, when considering your choice of lead indication to take into the clinic, and sequencing subsequent indications to maximize the value of your portfolio with the global payer value proposition in mind. Encouragingly, there are some good examples of best practice out there to learn from so companies needn’t start with a blank page. Many companies are now routinely engaging with payer organizations throughout drug development and mechanisms to do this are evolving. The UK now offers an innovation passport that allows companies to engage both regulators and payers on their target development profile, even before their product enters clinical development. Consistently, we see signals that companies that understand how to play ball with payers, and crucially have engaged them during drug development, will get earlier market traction as they gear up for launch.

Emma Thorp

Emma Thorp

Pharm Exec: What are some of your top tips to consider when it comes to talent planning in relation to EU expansion?

Thorp: The first is not to underestimate the recruitment timelines for hiring a European team. For example, six-month notice periods are not unusual in Europe, in contrast to the common two-week notice period in the US. This should be factored into timelines early on, especially when considering the sequence in which to hire in key positions.

Balancing the recruitment timeline is important when putting together the senior team. Although it’s tempting to prioritize building the team quickly, ensuring “heads of” are in place before sourcing their teams can prevent clashes later down the line and also bring about additional benefits by involving them in the process of building out their team.

A mistake US biotechs sometimes make is to keep their main decision makers US-based for as long as possible, which saves on cost initially, but long term they risk overloading their US teams and missing out on key talent in Europe. Getting one or two key positions in Europe early will also help steer the development program in a way that can dramatically increase the chances of commercial success, regardless of the decision to partner/out-license at a later stage.

Decisions around location should not be taken lightly either. It is useful to seek advice from those with lived experience of the locations you are considering, to determine which location will be best suited for the team you are building. The impact of Brexit needs to be considered here, though the traditional hubs of the UK and Switzerland are unlikely to change, and even seemingly smaller details, such as the quality of local international schools, can be a deal-breaker for any senior executives considering relocating their families. Of course, the recent shift from office-based working to remote or hybrid setups on the back of the COVID-19 response means that a more likely model for anyone setting up in Europe, certainly in the early stages, is the formation of EU hubs with remotely based talent spread across the region. For startups, this could make it a more attractive prospect than before, opening up a wider pool of talent and making things simpler all around.

Pharm Exec: Any final advice for companies in this space considering their options right now?

Thorp: Seek advice early and prioritize talent/workforce considerations in your strategic planning. In the early stages, there are low-cost options that can be highly beneficial for smaller biotechs looking to upscale their commercial strategy. Many Europe-based consultancies offer exploratory chats that can help to demystify the process involved in launching in Europe. In particular, they can offer guidance and insights into the current talent market, which can help with early stage planning.

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