Brought to you by Clay Heskett, Pierre Jacquet, Verena Ahnert from L.E.K. Consulting and Patrick Mooney, from Korn Ferry.
The launch of a first product marks a major turning point for biopharma companies. As they transition out of R&D mode and into a revenue-driven stage, operating expenses are scaled up but need to be carefully managed with an eye to midterm profitability. For many emerging U.S.-based biopharma companies, taking their first product to Europe is a daunting prospect. Running the gauntlet with European regulators and payers can be challenging for inexperienced companies, and the operational requirements of launching in two different regions can be significant. For this reason, many choose to out-license rather than “go it alone” — but this risks leaving significant value on the table.
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What are the key success factors?
Retaining the European rights of a first product can be hugely beneficial. It can be more economically attractive, companies can retain control over messaging, pricing and commercialization, and they can build market knowledge and critical relationships with key opinion leaders. Yet this approach may not be right for every drug, and companies need to consider whether an in-house launch makes economic sense. There are two triggers for taking the risk of commercializing alone in Europe:
- A differentiated value proposition that addresses clear, unmet needs, and provides potential for premium pricing
- Focused call points that facilitate a targeted go-to-market approach and lean commercial infrastructure
Once these triggers are identified, five key factors determine the overall outcome of a European launch. Those five key factors include:
- Over-investing in talent
- Empowering the European tea
- Planning and preparing early
- Sequencing the country launches
- Balancing regional vs. local European resourcing
Let us now take a look at each of these factors in detail.
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Over-investing in talent
Hiring and retaining high-quality people, with a strong track record in launch planning and execution and a good knowledge of European markets, is critical to success. Equally important is the need to create a well-balanced team, reward creativity and offer good career prospects.
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Empowering the European team
The complexity of the European pharma landscape makes it particularly important to entrust European decision-making to executives with in-depth knowledge of the market. Agree on which functions need regional versus global oversight, and give the European team autonomy to make key decisions for their markets — within the confines of the overall launch strategy.
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Planning and preparing early
The fragmented European commercial and market access landscape makes launch readiness a lengthy process. Another complication is the scarcity of biopharma hubs where U.S. biotech companies can easily hire large-scale teams. A lead-time of two to three years’ planning is recommended.
When ready, a staggered hiring process will help to maintain focus and flexibility, and avoid overspending on upfront costs. Start with the region head, then prioritize the regulatory, market access and medical affairs leads. Finally, build commercial teams at a country level, starting with a strong country manager.
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Sequencing the country launches
There is no set launch sequence, but countries that provide early access and reimbursement should be prioritized. Germany is often first, alongside Austria, Switzerland and the Nordic region. The U.K., France, Italy, and Spain usually follow in later waves, due to reimbursement differences and lengthy negotiation processes.
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Balancing regional vs. local European resourcing
Careful timing and efficient use of resources is key. Centralizing regional functional activities and placing customer-facing roles at a local level is often beneficial.
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What are the key implications for biopharma executives?
Commercializing a first drug in Europe alone is challenging. However, for the right product, Europe can be an attractive market with clear value.
Biopharma executives weighing whether to out-license or build a direct presence should take into account the following strategic considerations:
- Building commercial teams and operations across multiple countries requires significant capital. Understand the financial impact of going it alone and the potential shareholder dilution.
- Do not underestimate the operational distraction of a dual launch in Europe and the U.S.
- Talent and resources are dispersed in Europe. Select the location of the European headquarters early and over-invest in high-quality talent.
- Initiate launch planning at least two years prior to approval.
- Give the European team flexibility and the right level of autonomy to operate.
If these criteria are addressed, building a European presence and launching directly can provide a solid platform for international growth, creating meaningful shareholder value while making a difference to patients.