Pharmion Bets that Europe is Alright for Some
This article was originally published in Start Up
Pharmion is an in-licensing based company that has gone where a growing number of biotech companies fear to tread--to Europe. The firm is betting that the marketing infrastructure it has established there, plus regulatory expertise and willingness to take on some development work--even for products with dodgy or downright terrible pasts--will allow it to build a profitable business.
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Most US biotechs dream of becoming international corporations. But when the chance arises, economic realities often compel firms that retain European marketing rights to assign those privileges to other parties. That's prudent, because the costs and complexities of establishing operations in Europe should not be underestimated, say executives who've been there and done that. Sometimes minimizing risk is the best way to maximize the value of a compound.
Reliant Pharmaceuticals was created as an alternative to Big Pharma in marketing primary care products. But in-licensing market-ready products is expensive and primary-care sales forces expensive to maintain. With new CEO Ernie Mario, the company has now raised a huge amount of new money and will accelerate its efforts to in-license development stage products--a higher risk strategy, but the only way to ultimately create the margins necessary for sustainability.
Europe presents a big opportunity--but also significant challenges--to niche players seeking to expand. Some firms--such as US group Cephalon--have bought big in Europe, others like Shire and Celltech have made do with smaller acquisitions onto which they hope to build their own tailored infrastructure. No single approach is the same, and none has yet proven a clear winner. But all depend on finding the right products.