Pharma companies can expand globally with 3 key strategies

By Dr. Bethany Valente, Founder of Tempo7 LLC

Last year challenged biotech and pharma companies to explore what is possible. When several companies can develop COVID-19 vaccines at a record pace, it proves that the industry is capable of massive feats.

Even without the driving urgency of the pandemic, small and mid-market companies are capable of expanding their global footprints. In fact, a few factors will encourage small and mid-market companies to engage in global expansion. The following are four signals that it’s appropriate to pursue global developments:

• Ethical obligation: A company has the ethical responsibility to expand globally based on the advancements of certain projects. For example, one of the firms I studied in my research developed a therapy for a rare disease — even though that disease was outside the company’s usual expertise. The company still had an ethical obligation to bring this therapy to market. To ease the burden of building a global footprint, the firm partnered with a company that had expertise in global rare disease trials and commercialization.

• Research and development stagnation: When a company’s R&D process has stalled, global expansion could bring relief. If the development pipeline is too lean, the team has reached the limits of its expertise, or the path forward is murky, enter the global arena. Companies can find partners to advance development, revitalize the pipeline, or discover opportunities to out-license innovations in order to create new revenue streams.

• Limited domestic marketplace: A Japan-based firm I researched was concerned about the growth limitations of the Japanese market: The country’s population was generationally declining, which placed a natural limitation on the market’s growth opportunities. As a result, the firm became motivated to engage in the global marketplace to sustain revenue in the long run.

• National innovation incentives: Some countries have innovation incentive programs, especially to support populations in need. Firms can utilize these programs to reduce barriers to entry in new markets, develop partnerships, identify licensing agreements, and gain competitive advantages such as increased intellectual property protections.

If one or more of these factors is present, it’s time to turn an eye toward global expansion. There will be challenges along the way, but careful strategy will alleviate the burdens while maximizing opportunities.

How to Overcome Common Roadblocks to Global Expansion in Pharma and Biotech

When mid-market biotech or pharma companies reach the global expansion stage, they will face challenges that can affect their outcomes. Some of the common roadblocks include difficulty understanding short- and long-term impacts of national innovation systems and policies, selecting partners reactively, and failing to complete a cultural assessment before entering the marketplace. Here’s how pharma and biotech organizations can surmount these common hurdles:

1. Evaluate opportunities through national innovation systems and populations with unmet needs.

When businesses neglect to research how national innovation systems and policies increase their risk or impact their business over time. For example, in 2014, Pfizer India lost its intellectual property protection from the Indian government when the country awarded the intellectual property to an India-based firm to promote national economic growth. Pfizer lost what it already spent on the development of a novel therapy, as well as resources dedicated to the actual work. Failure to perform a risk assessment of India’s innovation system cost Pfizer millions of dollars, but Pfizer absorbed the blow due to its size. An issue like this could devastate smaller companies.

Before investing in an expansion project, research the target countries to understand their markets. Then, ask whether the target country (or regional bloc) supports entry by way of a national innovation system that facilitates a positive operating environment for your expansion. To put it bluntly: Make sure to only go somewhere that will welcome the work.

Additionally, take the time to understand how the area of expertise benefits the people in the target country. All of this boils down to basic supply and demand, so make sure to expand supply to regions that have actual demand. Look for opportunities to in-license or engage in regional partnerships to better serve the area.

2. Complete a cultural assessment of the target global market and partnership opportunities.

Cultural attributes will naturally impact innovation rates, yet many small businesses won’t dedicate resources to evaluating potential opportunities and risks when engaging with a new culture at market entry. Some of the pitfalls include communication breakdowns, duplicating efforts, and conflict. The lack of analyzing the effect of these attributions will significantly increase project costs. In fact, cultural differences often cause multimillion-dollar global innovation projects to fail.

When conducting a cultural assessment, include the natural cultural dimension profile, the link between the national cultural dimensions and innovation rates, as well as a risk assessment based on cultural criteria. This assessment will identify the potential risks of working with global teams within a particular country. Use the findings to develop a problem-solving strategy before issues arise from culture or expectation differences.

3. Develop an alliance strategy and use it to align partnership strategy.

When small companies select partners reactively instead of proactively, it leaves them at a disadvantage. It can lead to businesses selecting partner organizations without ensuring their objectives or strategies match. For example, if one business reactively partners with another to expand to a global market based solely on growth potential or immediate need, the partnership may collapse due to misaligned strategies and cultures. Partnering reactively instead of proactively can lead to market exits, which costs companies resources, distress on domestic business lines, and hurt future funding opportunities for domestic growth. Ultimately, these failed entries can damage a company’s reputation and brand equity.

To avoid harmful market exits and failed partnerships, formulate your partnership strategy and choose alliances wisely. Create an assessment to evaluate potential partnerships and alliances. What needs should a partner fill, and what capabilities are necessary to fulfill those needs? What are the most attractive attributes of the partnership? Do the companies align culturally and strategically?

Create an RFP of sorts to evaluate potential partnership prospects to determine whether they are a good fit with the global expansion strategy. Try including a “mini” cultural assessment within the assessment to account for cultural differences. If the potential risks outweigh the strategic fit, avoid the partnership.

Consistency is paramount when it comes to global expansion. Small business owners often get excited about “going international” and expanding their businesses, but they don’t complete the market research and assessment process to plan for success. Stay consistent with your strategy and evaluate your global entry plans accordingly. If they misalign, do not move forward.

For a successful global expansion, it’s most important to find a strategic fit and stay consistent. Innovating internationally involves plenty of risks, but there are also plenty of rewards, such as serving communities that could benefit. Market evaluation, cultural assessments, and partner alliance strategy will go a long way for successful global expansion efforts. With a plan in place, what opportunities can global expansion provide for your company?

Dr. Bethany Valente (Photo credit: Ryan McGibbeny Photography & Films / Tampa, Fl)

About the author

Dr. Bethany Valente is the founder and managing partner of Tempo7 LLC (, an innovation strategy consulting firm that develops strategic initiatives and uncovers growth opportunities through the Open Innovation Opportunity Program. Tempo7 helps biotechnology, pharmaceutical, CROs, and legal professionals to become industry leaders in today’s global, dynamic marketplace. She is currently co-authoring an academic article on the topic of national culture, national innovation systems, and open innovation strategy.