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The risky business of global expansion

A hunger for global expansion is fuelling biotechs’ search for the best skills
risky business

When speciality drug companies start snapping one another up, such as Alexion's recent $1.1bn swoop for Enobia, it is clear that the race for innovative treatments is gaining momentum. Big pharma is taking an increasing interest too, with GlaxoSmithkline's (GSK) recent licensing of an early stage programme for a lysosomal storage disease from Angiochem one such example.

Many of these biopharmaceutical companies originated in the US and then looked East across the Atlantic to Europe to provide the platform for their next phases of growth.

But what has driven their decisions to 'go global', what assessment do they undertake when setting up operations in Europe and what sort of people on the ground can realise the vision of a CEO several thousand miles away? Finally, are there learnings which may be valuable to biopharmaceutical companies contemplating international expansion?  

Broader reach
Dr Thierry Darcis, the vice president and general manager of ViroPharma's European operations, which he helped create in 2007, reflects on the company's decision to 'do it themselves' in Europe: “It was a financial no-brainer of course as 30-50 per cent margins for distributors are not unheard of, but also, as the products we have are ViroPharma's entire reason for being, we believe we bring a level of energy, hunger and determination in delivering innovative solutions to the patients who need them.”

Likewise, for Gillian Ivers-Read, executive vice president, technical operations and chief regulatory officer at Clovis Oncology, there was never any question of whether it would internationalise or not.

Indeed the intentions were made clear when the company was established in 2009 after it raised $146m in start-up financing: “As was the case for Pharmion, from the beginning of Clovis we knew we wanted to commercialise in Europe and the US. We are fine with the idea of using distributors for some of the smaller markets where it is difficult to be effective without the right people on the ground locally and a critical mass of products, but for the main countries we wanted to be in control of our therapeutics and maximise their full potential,” she explained.

In the case of Human Genome Sciences (HGS), which partnered GSK in developing and launching Benlysta for Lupus, Barry Labinger, chief commercial officer, vaunts the partnering approach: “We went through the process of looking at what we wanted to build in Europe and how we could do it in a way to complement GlaxoSmithKline's capabilities. We decided to set up in select markets led by a small regional HQ office, to ensure optimal commercialisation of Benlysta and also build our capabilities for future products.”

For Sangart, a privately-owned San Diego-based global biopharmaceutical company developing a pipeline of medicines to enhance oxygen-deprived tissues, research was key.

“We made the decision to invest early and substantially in understanding the markets we were going into, doing robust qualitative and quantitative market research in our lead disease areas, looking at market size, organisation design and potential pricing,” stated Clive Bertram, the firm's chief commercial officer.

Similarly, Steve Aselage, executive vice president and chief business officer at BioMarin talks about the 'homework' he and his colleagues had to undertake: “We had the advantage of there being a similar enzyme replacement product to ours already being sold by Genzyme in the EU. It gave us visibility to the opportunity and, at least to a limited extent, the issues we would have to deal with. Several of us had experience managing operations in Europe previously, so that was also a big help.”

“In addition to looking at the prescribing and payer landscape relative to your products and any current competitors, the other critical thing is to clearly identify who is involved in reimbursement and access decision-making,” reflects Luigi Costa, vice president Europe at Onyx Pharmaceuticals. “These may not even be experts in your asset's therapeutic area, but stakeholders who will evaluate it nonetheless and have a vote for reimbursement.

“You need to start engaging them early on about your product's potential place in this landscape upon approval, with consideration given to the benefits it may offer to the healthcare system.”

Human capital
Michael Bentley, a human resources (HR) consultant who has advised a number of US biopharmaceutical companies establishing operations in Europe, as well as having been Amgen's vice president HR Europe, speaks with a great deal of experience about the talent requirements for biopharmas and how these have changed: “At the outset, most of these companies seek experience over potential; people who have 'been there, done it', but who also come with a degree of humility and a clear realisation of what they know and what they don't, the latter being often just as important as the former,” he states.

“When I started at Amgen I would say that we tended to attract mavericks: people who, although they already had a successful track record, weren't comfortable in 'Big Pharma' and didn't see a future there. Now, 20 years later, you actually get people who, in addition to being very successful in major corporations, are comfortable but who have the appetite to do something quite different,” he concludes.

Aselage picks up this theme, explaining that BioMarin looked for individuals that had the capability of taking on broad organisational roles: “Many of the initial group needed to be able to function as country manager, account manager, market access manager and so on, all at the same time. Individuals who had spent some time in smaller companies tended to fit in well, while people whose experience may have been deep but narrow had more trouble adapting. We found people with an entrepreneurial approach and, importantly, people that were problem solvers.”

'Entrepreneurial' is often cited as a required skill for biopharmaceutical companies, but what does it actually mean? Tuomo Patsi, vice president Europe at HGS says that for him: “It means someone who is a self-starter, able to come on board with largely a blank piece of paper and quickly define where he/she can add value and then communicate this to the various stakeholders. Also, these people will not have the luxury of being selective about what they do.”

Recruiting people with a truly international perspective is key, according to Ivers-Read: “We are always looking for people who are able to take more of a pan-European view, and that, for the general manager role in particular, it is not all about his/her country.”

Costa, too, is clear about the kind of people that could make the transition to the biopharma space successfully: “It's people who are willing to take the risk of leaving organisations where there are lots of certainties to work within organisations which may have potential opportunities to be realised … but which at the same time can offer a lot more flexibility to really build something, not just progress or incrementally improve what has been done by other people.”

Philippe van Holle, now chairman international at Celgene, but who was also one of the company's first employees in Europe, contends: “We realised that without the right people the portfolio wouldn't achieve its potential. Everyone we hired needed to recognise in him- or herself the desire to contribute to the company and the patients. They had to feel 'I can make a difference here', whatever level they were at in the company.”

Bertram, however, points out that Sangart may face some unique challenges regarding its staffing needs: “There's not been huge investment in the disease areas we work in, so whilst we've been fortunate to date in getting good people, the challenge going forward, as we continue to expand, is to continue to attract top talent with the right fit.”

Learnings
Reflecting on what he learnt at ViroPharma, Darcis stresses the need for planning, which, he said, is essential “as it allows us to predefine the future.” He goes on: “Of course, things haven't always turned out exactly as we anticipated, but in identifying as many of the potential pressure points as early on as possible, we feel we have been able to respond more swiftly and effectively to any hiccups.” He clarifies:”Finally, all of us understand that we are a biopharma company; an EU 'start-up' and we use every dollar very carefully. We also need to be patient.”

Patience is indeed key for Bentley too: “Biopharma companies should walk before they try to run. Don't be too ambitious and don't be too rash because this is a long-term business and the opportunity is not going to go away; it is more important to do it correctly the first time.” 

Bertram agrees, saying that pragmatism and realism are critical: “We did our homework, so we are not kidding ourselves that we are going to capture every patient who enters the trauma room. Segmentation is key to understanding the real potential and then we build the organisation to target this.” 

Finally, Patsi is confident that the choice of making Switzerland the location for HGS' European HQ is one it would take again: “We have a very cosmopolitan talent pool here; in our European leadership team we have 10 different nationalities, 10 different mother tongues and that really adds to the diverse culture and the energy of our business.”

Several other US biopharmaceutical companies are in the early stages of planning for internationalisation and doubtless more will follow. Given the changing environment, it is crucial that they are able to demonstrate the differences that their therapeutics bring to current treatment paradigms, even if these are only incremental, as with European governments ever more governed by price, reimbursement will only become more challenging.

There are therefore hurdles to be overcome and talent to be assessed and attracted, but it is clear that the opportunities for these organisations, and the calibre of people open to such adventures, remain strong.


Patrick Mooney, Korn/Ferry International
The Author
Patrick Mooney
is senior client partner at Korn/Ferry International, London

16th April 2012

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