Avoiding pitfalls of US Biotech companies settling in Europe

Updated: Jan 19

In this article we would like to share our experiences in the most common and recurring pitfalls that US Biotech companies do when going global and coming to Europe.


We will address four key areas:

  • Europe Landscape

  • Implementation Strategy & Biotech hubs

  • Tax and IP considerations

  • Digitalization


The views expressed in this article are different from the established norms, but we believe they reflect today’s reality.


Because many HQs are now employees-less, resulting in millions paid in unnecessary leasing costs: how many employees work from home, in countries which are thousands of miles away from "the office"? This represents a significant tax risk for companies if your Key Positions do not reflect the reality of your structure.


The unprecedented times we live will accelerate policy changes in the way we live, work and get taxed.


European Landscape


Despite the single market, every EU country has different regulatory requirements and laws. Payer requirements and reference pricing systems also varies from one country to the other. And not to minimize multiple languages and cultural differences.


Common pitfall? Do not assume that habits and processes are the same in France and Germany, or Italy and Spain… As an example, in some countries you can create a company in as little as 24 hours, and some countries may require 3 months!


Implementation Strategy – Which Biotech hub?



If the General Manager is the obvious first hire, which position should come next?


When should Health Economics and Outcomes Research (HEOR) and Health Technology Assessment (HTA) being considered?


Common pitfall? Building solid tools that support decision-making take time and reaching out to Payers requires patience. It’s never too early to think Market Access.


What is the appropriate infrastructure and business process? Looking from the US, the European Biotech “places to be” seems very fragmented!

Every country has its own ranking: if Switzerland is the leading country for patents, mostly because of advantageous IP Box fiscal structure, academics cooperation and grants are relatively poor compared to UK and Germany. Spain, Catalonia, is the place to be for Digital Health & Big Data, Biomedical Sciences and Genomics, and offers good access to capital and tax incentives too!


Common pitfall? A central HQ is no longer the norm. To take advantage of the many European hubs, think competency centres. It’s also the most efficient way to build a rich, diverse culture.



IP Considerations and Taxes


“Cost +” is dead. New OECD rules and taking advantage of Biotech Hubs across Europe lead to more complex profit-split and profit-sharing methods in group companies.


A balanced Infrastructure designed to maximize your Value Chain and with the appropriate Key Functions are key factors to de-risk inter-company transactions and IP recognition.


Common pitfall? Too many companies pay unnecessary taxes because of intercompany transfer pricing.


Conducting clinical trials in Europe? Do not underestimate the importance of VAT (Value Added Tax) & Customs compliance. All goods have a customs value and therefore are taxable. Incorrect filing could lead to heavy fines and license bans. In addition, with an average rate of 15% around Europe, recovering VAT could lower your costs.


Common pitfall? Do not underestimate the importance of VAT (Value Added Tax) & Customs compliance. Incorrect customs documents can lead to high penalties and dramatic damage to your company reputation vis-à-vis of clients. As buyers, or receivers, are ultimately liable for the taxes in cross-border operations.



Digitalization : dilemma or paradigm shift?


FDA CFR - Title 21, General Data Protection Regulation (GDPR), HIPAA, SOX…


How to handle (patients) data protection, privacy, in a patchwork of different regimes? Extra-territorial laws impacts can arise depending on where your data is stored.


In a world that is interconnected with an increasing need for true collaborative interactions, you must ensure that your Cloud in protected and with efficient compliance programs.


Common pitfall? The IT department is often disregarded in strategic decisions about software integration. A global view is necessary to ensure harmonization and interconnection across all companywide systems.



 

We hope you enjoyed the read. For further information, do not hesitate to contact us by clicking here.

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