Demystifying Europe: a new approach to market entry strategy
Jeremy Broadis of Quintiles looks at how specialist pharma companies can evaluate a number of options when considering the sometimes daunting prospect of launching their product in Europe.
For speciality biopharma companies based outside of Europe, the prospect of commercialising here can be daunting – but there are smart solutions to cracking this lucrative market. There is a steady flow of companies developing and launching new niche products – often orphan drugs – which help improve outcomes for patients and generate revenue for shareholders. Often however, US or Japanese companies may hesitate to look beyond their own shores to drive further revenues.
Yet companies that overlook Europe risk missing out on the opportunities the world’s second-biggest market can offer. IMS Health estimates that the EU and non-EU regions of Europe together were worth $221.8 billion in 2012, second only to North America, which was worth $348.7 billon.
Despite the great potential of Europe, some specialist companies can be put off from launching here by perceptions of complexity and financial instability. But the message here is quite simple – don’t write Europe off – and don’t think your commercialisation options are limited.
There are smart solutions for companies in this situation, and if you get it right, Europe can provide a very healthy return on investment for specialist products.
Unlocking Europe’s potential
Many speciality companies can be scared off by the perceived riskiness of trying to commercialise a drug across Europe’s multiple markets, which all have their own complexities. The idea of trying to establish a company and product from the ground up in this environment is often overwhelming, and is sometimes simply written off. Other companies do decide to launch in Europe, but opt to out-license the drug to a big pharma player who is well established in Europe.
While this approach certainly cuts down on the risk, it can also reduce your company’s profits, with the deal favouring the licensing company. At the same time, there is no guarantee that the licensing company will give your product the same level of prioritisation throughout its lifecycle, which is perhaps one of the reasons why over 50% of pharmaceutical alliances fail to meet their objectives.
While it is quite understandable that companies settle for one of these options, it is clear that the outcomes can be unsatisfactory, especially if you believe your product has something to offer patients and physicians in Europe.
So is there another alternative? The answer is yes – you can choose to enter a partnership with an experienced provider of market access and salesforce services to help you crack Europe. That involves providing you with strategic advice about how to navigate the intricacies of Europe’s many markets, but also involves helping you implement that strategy with customers across the continent.
Creating a Roadmap for your product
Speciality products can generate peak revenues in excess of €50m across Europe , but unlocking this potential in Europe isn’t easy. Whether you are still completing clinical development, or are in the process of preparing your filing to the EMA, this is a good time to stand back and look at what the alternatives really are.
You will be aware that Europe represents a major opportunity, and yet from a practical perspective, you lack a roadmap for getting from here to a position where the drug is on the market and you are actively reaching key customers. That’s why a company who can help you draft that strategy – and then effectively execute it – could be the best option for you.
Successful market access requires insight and know-how on the key strategic decisions that are made at the European and national level, but also an understanding and familiarity with each local market. Each country has its own unique pricing and reimbursement system, comprising (national) health technology assessment (HTA) and sub-national commissioning or funding bodies, creating a complex tapestry of decision-making that can be baffling to the uninitiated.
For instance, In Europe’s biggest pharmaceutical market Germany, pharma companies have to deal with multiple stakeholders. As part of the Early benefit Assessment by the national Federal Joint Committee (G-BA), all new entities are categorised based on benefit against the appropriate comparator, usually based on recommendations on the value of the drugs made by health technology assessment body IQWiG. Health insurance companies have also stressed the importance of using the right comparator drug. These organisations, known as ‘sick funds’, want to see what clear evidence of the value a new drug generates compared with existing treatments.
In the UK, another key launch market, the National Health Service (NHS) has undergone further major reform in the last two years, and responsibility for funding medicines in England is now split between a total of 211 local Clinical Commissioning Groups (CCGs) and the new NHS England, a centralised body in charge of specialist drug commissioning. Another very important organisation is NICE, which rules on cost and clinical effectiveness of new medicines and issues clinical guidelines. Add to this restrictive formularies at the local level within each territory, and you have a considerable market access challenge before you.
Market access is everything, and you need to get the right strategy in place for each of your European markets as soon as you possibly can. If you choose a partner whose strength is understanding and engaging with multiple different stakeholders in Europe’s markets, this can help you make progress fast. One of the most valuable insights at this stage is understanding which markets will be the key ones for your product, and how to engage all the key stakeholders in those markets.
You can find partners who offer an holistic approach – bringing together understanding of products, the markets, and then developing a plan in alignment with your company’s strategy, and finally also having the capability to implement that plan throughout Europe.
The corporate structure
Any company looking to enter Europe needs to decide on what infrastructure is required. If you choose to work with an experienced service provider, this lets you bypass the need to set up a full corporate infrastructure across Europe, avoiding all the time, risk and upfront expense this entails.
An established service provider will be able to rapidly recruit, train and then deploy frontline personnel, which means that your product can potentially reach the market (and create revenue) months earlier. These frontline operatives can be managed by a core senior European management team of a European head, a finance head, and a medical affairs and compliance leader. Other core head office functions, such as medical information and pharmacovigilance, can then be added as required.
The message is clear – don’t write off the potential of your product in Europe – there are multiple paths to commercialise your product.
The outsourcing model has already been tested successfully in the last few years by a number of companies, who might otherwise have walked away from Europe, or settled for sub-optimal licensing deals.
Once the product is on the market and generating revenue, this model allows a company to retain complete control over its asset. During this period some companies may look to increase the market value of their product before striking a licensing or co-marketing deal with a larger firm, or even selling the asset or indeed the entire company to another player.
Whatever your long-term strategic decisions are, gaining access to local market knowledge, strategic insight and executional excellence will be vital to improving your probability of success in Europe.
About the author
Jeremy Broadis is responsible for helping smaller BioPharma and Medical Device companies successfully launch their specialist products in Europe through the provision of medical affairs, market access, marketing and sales solutions which add value and manage risk while retaining flexibility and control.
Throughout his 15-year career at Quintiles, Broadis has also worked in market development, commercial consulting and financial investment roles. Jeremy holds a Masters’ degree in Mechanical Engineering from Cambridge University.
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