Emerging biotech companies preparing for their first product launch typically focus launch preparations on the United States and European Union. This is understandable given the resource-constrained ‘start-up’ framework within which these companies operate. However, looking beyond the these largest markets can help an emerging biotech become cash-flow-positive more quickly by creating early revenue streams and treating more patients around the Globe while making minimal at-risk investments.
This is particularly true of rare diseases with high medical unmet need. Below are three important reasons to look at markets outside the United States and European Union early on:
1. Opportunities for Early Revenue Streams
Several countries have favorable “Named Patient Importation” (NPI) mechanisms that allow therapies to be imported after US FDA approval and before local registration. Products imported through NPI are often reimbursed at a price close to US pricing. NPI pathways thus allow for revenue generation quickly after FDA approval and at a high margin. Four concrete examples of favorable NPI markets include:
Gulf Cooperation Council (GCC): Saudi Arabia, Kuwait, the United Arab Emirates, Qatar, Bahrain, Oman
GCC markets typically directly fund the reimbursement for NPIs. Saudi Arabia (KSA) has the highest GCC population, and citizens have the right to receive free access to best available care — even prior to local regulatory approval. Patients typically obtain drugs available through an NPI program via institutional hospitals in KSA (such as the famous ‘King Faisal Specialist Hospital’ in Riyadh). A committee must approve the usage of NPI drugs for each individual patient before they reimburse a therapy. Although other GCC countries are smaller in population size, they too have attractive NPI frameworks and might even grant access before KSA (e.g. Qatar).
Turkey
Turkey has a very large population and a favorable early NPI framework. It typically takes 9-12 months after FDA approval for the first patients to receive a drug through NPI. Under NPI, the Pharmacists’ Association (TEB) usually negotiates a 30-50% discount to US list price, or volume caps. Formal registration in Turkey may be pursued in addition to NPI to achieve broader access. However, registration can take up to five years and will likely entail additional price discounts (while also granting access to a larger population). Turkey can be a highly attractive market for rare disease companies. For example, it is one of the largest worldwide markets for Spinraza, Biogen’s treatment for spinal muscular atrophy.
Brazil
Of the Latin American countries, Brazil offers the most favorable NPI mechanism, although complicated by the requirement for legal action against the government to for a patient to gain access through NPI. Patient advocacy groups often aid patients and their families in navigating the process. When pursuing NPI, regulatory filing is recommended and expected in Brazil (if successful, reimbursement negotiations would likely lead to price levels well below US prices).
Israel
While Israel also offers a (somewhat cumbersome) NPI program, most companies directly pursue drug registration, which is fairly straightforward and typically spans 12 months from application to approval, followed by 2-3 months of reimbursement negotiations. Applications can be submitted in January before FDA approval, as long as FDA approval is obtained by October, allowing for rapid entry post US approval.
2. Capable Local Distributors
All of the country examples above have highly capable distributor organizations that understand the specificities of each market and often have existing customer relationships. Distribution deals are typically made at a percent of sales, so from a manufacturer’s perspective they represent a nearly pure financial upside (if negotiated well).
So, to deploy early NPI revenue opportunities, the manufacturer does not have to invest into the build-up of a local infrastructure. Instead, distributors offer an efficient deployment option with minimal upfront and recurring investments.
Selecting the the right distributor organization is key, even if the manufacturer is expecting to treat only a few patients in a given country. Companies should understand the regulatory risks and be careful to remain in legal compliance. A misstep, even if it only affects one patient, will reflect strongly on a drug developer’s reputation at a global scale. Employing an ‘alliance manager’ (separate skillset from ‘BD)’) to work with distributors across markets is an important success factor and will minimize the distraction of the global team from the United States and European Union.
3. Medium- to Long-term Opportunities Requiring Early Planning
In some countries, where no favorable NPI pathway exists, there are still significant opportunities over the medium- to longer-term that should not be overlooked. Japan is one important example. No early access opportunity exists in Japan, and bridging studies are generally required for drug registration – thus, considerable upfront investment is needed before market access is possible. However, if orphan designation is achieved, Japan remains a market with comparatively high pricing potential and thus high revenue opportunities. The commercial model in Japan has also been shifting away from large field forces to leaner and more focused organizational structures. Even if a licensing strategy is pursued in Japan, it is critical to obtain a robust understanding of the regulatory and market access environment before engaging in negotiations.
Conclusions
There are important opportunities for biotech companies outside the United States and European Union – both near-term and longer-term. We recommend evaluating these early on. In high-priority markets with favorable NPI frameworks, we advise identifying and engaging with local distributors with the aim to have term sheets by the time of FDA approval. In markets representing longer-term opportunities such as Japan, we recommend an early evaluation of regulatory and market access considerations so that companies go informed into potential partnering discussions.