Sector Spotlight: Pharma services - Establishing a North American presence
Pharma services businesses need to be global to succeed, and North America is a crucial market, according to Dr Charles Woler, a healthcare professional with over 30 years’ experience in multinational as well as smaller earlier-stage businesses and part of Inflexion’s Healthcare Advisory Board.
North America offers enormous growth opportunities as it is the largest market worldwide with a single language and culture, making it fundamentally different from Europe. However, its sheer size and complexity mean that to capture a significant market share, a physical presence is essential. While anyone can sell into the US, truly succeeding is a different matter, according to Charles. “To get a successful market share in the US without being there is impossible. You have to be global with pharma services businesses to succeed.”
Many European and UK companies operate in North America, but reaching a certain scale necessitates local presence to sustain growth. “Being on both sides of the Atlantic and having real locals is needed to drive progress,” Charles says, warning that bringing a management team over from Europe to the US will only succeed partially and temporarily. He stresses the importance not just of experience and track record, but also connections. “Local people on the ground bring vital experience and connections. Combining the networks of people in the UK, Europe and the US can really broaden the scope of a business,” Charles says.
Going stateside
Expanding into North America can be done organically or through M&A. Canada is often a first port of entry for firms due to its cultural similarities with Europe and its slightly simpler market entry requirements. It’s also important to consider where within a country to start out, with pharma hubs in New York, Philadelphia and Boston all offering potential and Charles saying it depends on a firm’s own particular requirements.
“East Coast is simpler than the West Coast from Europe, and once there you can easily travel around. Psychologically, US clients they can live with a time difference in the US, but it can feel farther if it’s Europe even if it is the same time difference.”
Establishing a presence from scratch involves navigating complexities, namely hiring locally. The cost implications can be steep, not only because the best talent is expensive in the US but also because of the resource required to identify, particularly if doing so from Europe. Expanding into North America organically is also slower than through acquisition, and this can mean missing opportunities as efforts are focused elsewhere. Slow progress can also risk the perception of failing to launch and even undermine credibility.
For these reasons Charles recommends M&A as a quicker route to market entry. “You can achieve immediate critical mass and if you’ve prepared adequately, you can integrate and optimise swiftly,” Charles says, defining ‘swift’ as 12-18 months. “Execution is as critically important as it is difficult. To minimise costly mistakes, you need to prepare very well. Then you can benefit from cross selling and upselling.”
But failing to plan is planning to fail according to Charles: “If you don’t adequately research and plan everything before an acquisition, you risk a costly acquisition that fails to bring successful globalisation.”
How private equity can help mid-market pharmaceuticals businesses
Private equity can play an important role in navigating the complexities of expanding into North America. Capital is essential for growth, and PE firms provide not only equity but also help source debt more efficiently. “Private equity can change a company’s growth trajectory significantly,” Charles says. “The right investor can bring significant experience to help steer a business and help it grow faster. Their commitment can help maintain momentum and direction,” he says, speaking from vast experience. In particular he feels they can help with the complexities of M&A as well as expertise in enhancing a company’s digital presence. Inflexion has helped its portfolio to complete over 480 acquisitions since inception across more than 30 countries.
He is part of this journey with Upperton Pharma Solutions now. The specialist contract development and manufacturing organisation has expertise in particle engineering for the pharmaceutical industry and received funding from Inflexion in 2022 which has supported the launch of a development, analytical and GMP manufacturing facility which opened earlier this year. The new facilities provide a ten-fold increase in manufacturing space with an associated four-fold increase in analytical space, enabling the company to offer fast development timelines to more customers and ability to handle the more complex molecule classes at scale, including highly potent compounds. Overall, it’s helped Upperton to support existing and new customers into larger stage development and into commercial production for smaller volume, high value products.
Digitally, the firm has worked with Inflexion to install numerous financial, commercial and operational systems to strengthen its infrastructure and increase the efficiency of the day-to-day operations.
The firm was also able to expand its services internationally, resulting in Upperton being awarded the King’s Award for International Trade in 2023. Looking ahead, the business is working closely with Inflexion to assess M&A opportunities to support its global efforts further, with North America a key target.
Healthcare is one of Inflexion’s six core sector focuses, with over a dozen (13) investments in the space to date. Current investments include Rosemont Pharmaceuticals, CNX Therapeutics and ELCG. All Inflexion portfolio companies, regardless of size or ownership stake, have full access to our dedicated value acceleration resources covering digital enhancement (including data, AI, technology, cybersecurity and digital marketing), international expansion, M&A, ESG, commercial strategy and talent management.
Dr Charles Woler currently holds Non-Executive Chair and Non-Executive Director positions at Sygnature Discovery (UK), Upperton Pharma Services (UK), ERBC (France-Italy), IBL LIFE (Mauritius), Medtrade Products (UK), Optimapharm (Croatia).
Charles has spent the last 30 years in the healthcare industry, both in large multinational pharmaceutical; companies and smaller, earlier stage companies.
Previously, Charles was Chair and CEO of Roche France, CEO of SmithKline Beecham’s European pharmaceutical business (UK), CEO of Cadus Pharmaceuticals (U.S) and CEO of Biomnis (France).
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