Why US Biotech Companies Should Consider Launching in Europe Directly

In the past, biotech start-ups have typically sought partnerships with big pharmaceutical companies. However, the landscape is evolving. As we move further into the 2020s, US-based biotech firms may find that licensing their drugs in Europe directly is becoming a more viable and beneficial option. There is a shift happening for US biotech companies and below examines why. 

The changing landscape of drug licensing

For a US-based pharmaceutical company, the prospect of taking a new drug to market in Europe can seem overwhelming. Historically, many young biotech firms have opted to out-license their drugs in exchange for royalty and milestone payments rather than navigating the complex regulatory pathways of commercialization on their own. While this strategy has long been considered a safer route, it may no longer be the optimal choice.

Drug Licensing in Europe vs. the US

According to a 2024 IQVIA report, global medicine spending is projected to reach $2.3 trillion by 2028, with Europe and the US dominating the global biotech market, with China and Japan emerging as important players. 

However, the regulatory frameworks for drug approval differ significantly between the two regions. In the US, the Food and Drug Administration (FDA) has traditionally been seen as a centralized consumer protection agency, often criticized for its slow approval process due to a focus on safety. On the other hand, the European Medicines Agency (EMA) was established to standardize commercial rules across Europe, but is sometimes criticized for prioritizing commercial interests over swift approval.

Given these differences, many smaller biotech companies have historically preferred to out-license their drugs to avoid managing the two distinct approval processes. Licensing, royalties, and mergers and acquisitions have long been key drivers of the biotech and pharmaceutical industries.

The benefits of direct launch in Europe

The data and analysis suggest that the conventional wisdom of licensing drugs in Europe may no longer be the best approach for US biotech companies. While licensing can provide a quick return on investment through royalties and milestone payments, launching a drug directly in Europe can lead to higher financial rewards, greater control over the commercialization process, and access to a larger market.

Additionally, the centralization of drug approval processes within the EU has made it easier and faster for companies to gain access to the European market. Companies that previously might have avoided the complexity of navigating multiple regulatory agencies can now benefit from a more unified approach.

The biotech landscape is changing, and so is the way US companies approach the European market. Historically, many biotech firms sought acquisition by or partnership with larger pharmaceutical companies as their exit strategy. As the market continues to evolve, the opportunity for US biotech companies to independently navigate the European regulatory process and access its lucrative market may prove to be one of the most beneficial strategies for long-term growth and success.

EPM Scientific has a strong presence in both the US and Europe. We ensure the best talent is in the right place at the right time to help promising products reach the market. If you are a biotech organization considering a launch, get in touch and let us help you find the right connections.