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Why US Biotech Companies Should Consider Launching in Europe Directly

Posted on April 2019

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​​In the past, biotech startups have sought to partner with big pharmaceutical companies.  However, the market is changing — in 2019 it may be better to license directly in Europe.

For a US-based pharmaceutical company, the prospect of taking a new drug to market in Europe can be daunting.  Many young biotech companies decide to out-license for royalty or milestone payments instead of navigating the tricky path to commercializing their own product. However, this strategy may be a mistake. Let’s examine why... 

Drug licensing in Europe vs. the US

Europe and the US dominate the global biotech market (although China and Japan are important growth markets of their own). This trend is not likely to change, a 2019 iQvia report predicted that global pharmaceutical spending will exceed $1.5 trillion by 2023 with market leaders in the US ($625-665 billion,  up 4-7%) and Europe ($195-225 billion, up 1-4%). 

However, the US and Europe have very different requirements for clinical trials and new drug applications.  Historically, the US Food and Drug Administration (FDA)  has been seen as a centralized consumer protection agency — with the critique that it slows approval with safety considerations.  In contrast, the EU European Medicines Agency (EMA) was designed to standardize commercial rules — with the critique that it primarily preserves commercial interests.  There is a debate as to which system approves drugs quicker, a 2015 analysis indicates that the US is likely the faster of the two approval processes (304 days as compared to 478 in Europe). 

Small companies may not want to invest in two very-different approval processes.  Traditionally, licensing has been regarded as a good exit strategy for biotech and small pharmaceutical companies to help manage risk, which is why licensing, royalties, mergers and acquisitions are such major drivers of the biotech and pharma industries. 

But is European licensing really the best exit strategy for US companies in 2019? 

Data Supporting European Launch over License

A 2013 analysis published in the Business and Medicine Report examined companies facing the launch-vs-license dilemma.  

Using public data from the EMA database the study examined US-based companies who had chosen to market their primary drug in the US, but were then facing the European launch-or-license decision.  From 2003-2013 the study identified 25 companies fitting this criterion, 9 of whom chose to launch directly in Europe and 16 of whom chose to license for royalty and/or milestone payments. The study found that the “launch companies significantly outperformed their licensing peers” and that “launching a drug alone may lead to significant financial reward and success”.  To put numbers behind this claim, in a two-year window (one year prior to EMA approval to one year post-approval) the median share price of the launch companies increased by 46%, as compared to 2% for the out-licensing companies.  

Now this study had small numbers and a wide range of variation in the companies performances.  But it gives an important insight into the benefits of navigating European regulatory structures.

While there are likely many factors contributing to this data, it's possible that we’re simply seeing a direct result of the EU's new centralization. Before 1995 there were 15 different national bodies regulating drugs in the European Union. Since the formation of the EU, what used to be a country-specific launch in Europe has become a centralized review leading to efficient access to Europe’s population of 741 million people

Regardless, the data suggests that the conventional wisdom is no longer true. Biotech companies should strongly consider launching directly in Europe. 

In conclusion

Traditionally biotech companies have sought to be acquired by, or partner with large pharmaceutical companies.  However, this model is changing. Now companies may have more success going straight to market in Europe. 

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. Our process is fast, safe, and efficient.  If you are a US or Asian biotech company considering a European launch let us help you find the right connections.  Please feel free to reach out directly at


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