Gaining Access to the European Market

The European market presents attractive opportunities to life sciences manufacturers, but is characterized by significant challenges as well. Legal, regulatory and cultural differences are present throughout the market that can add to costs or limit market access. Nevertheless, US and other non-European pharmaceutical developers and manufacturers are seeking creative solutions that enable them to have a presence in the market without the need to make significant investments to their supply chain processes. This article will attempt to explain why international pharmaceutical companies struggle to break into the European market, how some of these companies are embracing service partnerships that enable them to gain traction and realize profit, and what companies should look for when selecting an effective partner.

The challenges: a diverse union

For the most part, there are few differences in how the pharmaceutical industry operates in either Europe or the United States. The emphasis on research and development and safety remain critical across both markets, as does the constant need to monitor competitors and be among the first to market new products. The vital difference is in the market themselves, as the US is one domestic market governed by a single regulatory body, while Europe is comprised of 27 countries with 27 (or more) different regulatory authorities, national laws, languages and cultures.

While there are clearly a diverse set of standards for each European Union (EU) country, it’s important to recognize what makes them similar. While there is no across-the-board EU healthcare system, each country has adopted a single-payer system. The EU maintains free market trade, enabling companies to release products across Europe, ship the products from one country into another and sell and market these products without special customs or legal impediments (excepting situations in which the European Medicines Agency may have risk management plans and regulations in place.) There is not, however, a continent-wide pharmaceutical market where patients may use insurance to obtain drugs. While over-the-counter medicines can be purchased in all EU countries, prescribed medicines that fall under insurance plans are represented through a domestic system.

The challenge for US companies, therefore, is to decipher the various practices and regulations, and their varying complexities, within each country. Wholesalers, retailers and hospitals generally operate under the same guidelines across Europe, but there are noticeable differences. For instance:

• In France, all hospitals issue tenders for pharmaceutical products, meaning they ask the manufacturers for price quotations, payment terms, etc., while other countries regulate prices by law
• Packaging variations from country to country often depends on the product, especially if it is an ambient product (kept at 15-25°C). Most of the products are distributed in an “uncontrolled” way, meaning no temperature requirements are fulfilled during transportation, depending on the stability data of the product. Countries like Austria, however, insist on temperature monitoring during transport to the pharmacy or hospital. Meaning all shipments need to be temperature controlled, another task to be fulfilled by the 3PL.

When it comes to packaging, each country requires native-language packaging, on top of which there are other critical regulations specific to that country. For instance, the Italian government began in 2000 to enforce the track and trace of pharmaceuticals through the Bollini Law. This law requires application of a special sticker containing a serial number and bar code to each unit of sale. The Bollini Law also requires all parties within the supply chain to record and archive each serial number. In Greece, government stamps are required, while France demands price vignettes. The result is that there is simply no way to mass market pharmaceuticals in Europe without wading into a certain amount of regulatory chaos that cannot be controlled from one venue.

Additional challenges occur in simply physically bringing a pharmaceutical product to market in Europe. The majority of US pharmaceutical companies rightly concentrate their resources on R&D and do not necessarily invest in the infrastructure needed to handle global distribution or related processes such as order to cash. These companies wish to avoid the distraction and expense of having to develop processes for European order management (and the various language issues that accompany it), warehousing and transport, and financial management.

Ultimately, making a half-effort approach to marketing in Europe leaves companies with a thin core team on the ground in Europe and the high potential for confusion around issues such as tax regulations, VAT rates and lead times needed to distribute between various countries. When the core distribution processes are being overseen by multiple individuals who may or may not be working under the same system or communicating freely, the potential for small logistical issues to escalate into larger problems is significant.

The solution: Local knowledge

The confusion and complexity of the European market does not mean that US companies need to automatically dismiss the notion of expanding. The most viable solution is to conserve internal resources and outsource European supply chain services to a reliable partner that has specific knowledge of the pharmaceutical industry and is highly experienced in the management of commercial products across Europe. This enables companies to jump into the European market with both feet and avoid the half-measures.

Once a company decides to create a service partnership, however, further determinations need to be made — namely, what is the make-up the ideal partner? To create the most stable relationship and realize maximum cost and resource efficiencies, the service provider should be able to involve itself hands-on throughout the life cycle of a product and well in advance of its introduction to the European market. This means the service provider can control the management from clinical supply through to commercial supply, with the greatest possible flexibility and the fewest number of outside entities involved.

To maximize the effectiveness of its service partner, US pharmaceutical companies should strongly consider the provider’s ability to oversee the following supply chain steps:

• Clinical studies. Assistance with Investigational Medical Product (IMP) preparation and management for all phases of clinical studies, as well as the Clinical Trial Application to Competent Authorities; the provision of scientific advice and the running of CME events;
• Regulatory support. Established contacts with local authorities on both day-to-day EU pharmaceutical regulatory matters as well as topics related to controlled drugs (e.g. narcotics) and anti-counterfeiting;
• Named patient sales and compassionate use. Program rules vary from country to country and the service provider should have expertise to maximize the potential of these programs;
• GMP manufacturing. Access to a network of chemical and microbiological laboratories and offices audited and approved by both the EMEA and local authorities; ability to accommodate production of small volume products in different forms, as well as secondary packaging, as required;
• Pharmacovigilance. Services including collection, review and follow-up of SAE and ADR reports; plus generation of regulatory reports, submission of expedited reports to regulatory authorities, and review of scientific literature for adverse events and call center services;
• Order-to-cash. Provider should be able to offer a single point of contact for all customers, as well as full transparency on inventory levels while keeping a tight control on the flow of goods in Europe and GMP processes and infrastructure; Product finishing. Established late stage assembly and labeling processes, as well as a Qualified Person on-site to approve all manufacturing steps for room and controlled temperature products;
• Import and export. Expertise to assure compliance with the rules and regulations of all European countries;
• Support for marketing and sales activities. Comprehensive support that extends from consultation, planning, launch and operation to continuous performance monitoring of marketing and sales campaigns. Capability to provide product literature and patient-education materials in local languages, through well-designed stocking programs or on-demand printing services.

Presently, there are several service providers with the ability to successfully oversee one, or perhaps a few, of these critical supply chain steps within the European market. Our company, arvato services healthcare, a member of the arvato AG group of companies (part of the global media and services player Bertelsmann AG), is one of the few to offer a full life-cycle supply service across all stages from clinical to commercial. As such, arvato services healthcare is able look at the process of bringing products to market as a whole and continually optimize key influences in an integrated manner along the entire marketing supply chain. It is able to proactively steer all processes, which becomes increasingly critical as a product portfolio and communication channels grow in complexity.

The challenge for US pharmaceutical companies attempting to enter the European market is considerable, but the potentially payoff is equally significant. Working on its own, it stands to reason that most US companies will be unable to profit in the near- or long-term from such a venture. However, an effective and powerful service provider, supplying a single point of contact within the full supply-chain life cycle can easily create a partnership that becomes a natural extension of a US company throughout Europe. This appropriate allocation of time and resources, combined with the peace of mind of working with a partner with knowledge of regulations, cultures and languages, is the ideal method for creating a true bridge to Europe. PC