A strategic approach to local affiliates in the global era

Market Access
strategic approach

While global harmonisation remains the holy grail, the reality is that pharmaceutical companies still face significant challenges navigating regulatory differences. Stefanie Lietsch-Dallwig considers whether changes to the local affiliate model could ease the load.

With the rapid evolution of the global regulatory environment, pharmaceutical companies must deal with increasingly complex and often competing demands in key markets.

Industry has traditionally relied on local affiliates to ensure compliance with mandatory regulatory or legal requirements in each region or country. A large pharmaceutical company can typically have as many as 100 operating companies or affiliates around the world to help manage its growing portfolio of mature products.1 But growth brings its own pressures, increasing not only the amount of work required by local affiliates, but the volume and type of that work.

This global shift has been brought about, in part, by an unprecedented demand for innovative therapies, new ways of working, supply chain pressures, changes in the dynamics of research and development (R&D) and a move towards telemedicine and digital health.

Local affiliates are often stretched beyond their capabilities, a situation amplified by increasing shortages in expertise across the industry, exposing companies to significant risk. Compliance with applicable laws and regulations, which vary according to market or region, is mandatory and failure to comply can lead to critical regulatory action, considerable financial impact and reputational damage.2

As analysts have noted, heightened regulation in smaller markets requires companies to have suitable compliance resources to ensure compliance standards are not compromised.2 It is crucial companies evaluate the way they operate at the local level to reduce risk and invest resources where they are most needed. This includes reviewing whether the current local affiliate model is fit for purpose.

Harmonisation still a work in progress

Global harmonisation has been seen as the holy grail that will enable companies to streamline the processes and activities of local affiliates. The development of ICH Guidelines for the registration and maintenance of pharmaceutical products is one significant step on the path to harmonisation.3

The European Medicines Authority (EMA) and the US Food and Drug Administration (FDA) have also established joint working groups and forums for information sharing and collaboration, while initiatives such as Project Orbis are also having a positive impact, bringing together several international regulators in a bid to accelerate the progress of potentially life-saving cancer products.4

The reality is, however, that even as the global push for harmonisation continues, companies cannot afford to lose sight of local requirements. There remain critical differences in drug and device regulations between markets in everything from administration to safety. These differences add to the cost and complexity of operating in some markets and, if not understood and navigated with sufficient expertise, could ultimately affect the ability of patients to access lifesaving therapies.

Companies must be able to rely on people in the region who are familiar with the culture, the language, and the regulatory framework, or risk not only damaging mature portfolios, but reducing future prospects.

While many assume the market in Europe is harmonised through the centralised procedure, and many products are authorised through the national procedure, each country still has its own processes. and these may not be complied with even if the centrally authorised product is not launched in all EU countries.

Growing pressures on local affiliates

In an ever-changing global landscape, the management of mature portfolios becomes even more critical. As they are integral to revenue streams, they require constant monitoring at the local affiliate level. 

Local affiliates must have strong knowledge of regulations and a good working relationship with relevant health authorities in order to stay across critical business, including managing pharmacovigilance and maintaining regulatory dossiers and labels, as well as licences, for mature products. Even a minor administrative oversight can mean the difference between keeping a product on the market or losing marketing authorisation.

They also must keep headquarters abreast of any changes to local regulations, so that they form part of the company’s global strategy. These multiple demands put enormous pressure on local affiliates, many of which lack the expertise and resources to juggle compliance requirements with the need to grow business.

In the Nordic region, for example, the medicines agencies have joint guidelines and assessments to promote the launch of multi-country packaging, with the potential to reduce costs and provide greater flexibility.5 But, without knowledgeable representation at the local level, companies’ EU marketing authorisation departments may not be aware of the opportunities this collaboration affords. Even if they have a local affiliate, that affiliate may not be sufficiently resourced to manage the translation process. 

In addition, as companies cut costs to streamline operations, there are fewer people on the ground in different jurisdictions to handle sensitive and time critical issues. Indeed, it is increasingly clear that the current local affiliate model is not scalable and, in some ways, not sustainable.

Diminishing pool of talent

Bigger companies may be able to afford to assign experts to several domains, such as safety and regulatory, to ensure they have eyes on all the crucial parts of the local picture. However, experience shows that smaller companies are more likely to have just the one resource at the local level who will have to wear multiple hats, increasing the risk that at least one key domain may not get the attention it requires.

Regardless of a company’s ability to deploy resources, they are all drawing on a diminishing pool of talent. The industry is experiencing severe labour shortages, with a paucity of experienced STEM (science, technology, engineering, and mathematics) professionals. According to a McKinsey report, the current pool of STEM talent is at least 14% lower than demand.6

One way to relieve the pressure and ensure support in a key market is to engage a partner that can deliver appropriate expertise and experience, as and when required.  

Staying ahead of the curve

Given that local affiliates need to meet compliance requirements, as well as support strategic objectives, separating these responsibilities could be an attractive proposition. External partners can support and manage daily tasks, enabling a more streamlined approach to getting products to market and reducing cost pressures.

Companies, particularly smaller or mid-size, may also find it cost effective to work with a local specialist for certain activities, such as pharmacovigilance, rather than employ a suite of on-the-ground experts. A strategic partnership at this level would ensure compliance obligations are met without the need to hire a full-time employee, assuming such expertise can even be secured in a competitive market.

With the right people in the right place at the right time, pharmaceutical companies will be better positioned to navigate the regulatory path in each jurisdiction with confidence.

The contents of this article are solely the opinion of the author and do not represent the opinions of PharmaLex GmbH or its parent Cencora.


  1. The Pharmaceutical Industry in Figures, EFPIA, 2023. https://www.efpia.eu/media/rm4kzdlx/the-pharmaceutical-industry-in-figures-2023.pdf
  2. The challenge of compliance in life sciences: Moving from cost to value, Deloitte, https://www2.deloitte.com/content/dam/Deloitte/global/Documents/Life-Sciences-Health-Care/lshc-challenge-of-compliance.pdf
  3. Harmonisation for Better Health, ICH. https://www.ich.org/page/mission
  4. Project Orbis, FDA. https://www.fda.gov/about-fda/oncology-center-excellence/project-orbis
  5. Nordic collaboration (FINOSE), https://www.fimea.fi/web/en/development/therapeutic_and_economic_value_of_medicines/nordic-collaboration-finose-
  6. Emerging from disruption: The future of pharma operations strategy, McKinsey & Company, https://www.mckinsey.com/capabilities/operations/our-insights/emerging-from-disruption-the-future-of-pharma-operations-strategy
Dr Stefanie Lietsch-Dallwig
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Dr Stefanie Lietsch-Dallwig
6 December, 2023