The European Medicines Agency (EMA) is a cornerstone in the regulation of medicines across the European Union (EU). Recognizing the unique challenges faced by small and medium-sized enterprises (SMEs) in the biopharma and MedTech sectors, the EMA has established a dedicated SME initiative. This program is designed to support innovation by simplifying regulatory processes and providing critical resources to startups aiming to bring innovative treatments and medical devices to market. 

Understanding the SME Initiative 

The EMA’s SME initiative offers a range of incentives and support services aimed at easing the regulatory burden on smaller companies. The primary goal of the initiative is to foster innovation by helping these companies navigate the complex regulatory landscape that often poses significant challenges for startups with limited resources. 

Importantly, the SME status is not limited to pharmaceutical companies; it is relevant to all types of biomed and biotech companies, including those involved in medical devices, digital health technologies, and other life sciences fields. This broad applicability ensures that a wide range of innovative companies can benefit from the EMA’s support, regardless of their specific focus within the biomedical ecosystem. 

To qualify for SME status, companies must meet the European Commission’s definition of an SME, which includes having fewer than 250 employees and meeting specific financial criteria related to annual turnover and balance sheet totals. Both European and non-European companies can apply for SME status. However, non-European companies must appoint a pharmaceutical regulatory affairs consultancy to serve as a European Economic Area (EEA) representative to handle their application. The process involves registering with the EMA, submitting relevant financial and legal documentation, and, for non-European companies, coordinating through an appointed representative within the EEA. 

It’s also worth noting that the EMA’s SME Office does not charge any fees for registering SME status. This makes the initiative even more accessible to small companies, allowing them to take advantage of the available resources without incurring additional costs. 

When to Seek SME Status 

For startups, the ideal time to seek SME status is during the early stages of development, particularly when the company is preparing to engage with regulatory bodies or seeking investment. Early-stage companies often face significant challenges in navigating regulatory requirements and securing funding. Obtaining SME status can provide crucial support and resources that help mitigate these challenges. 

The Strategic Value of SME Status for Startups 

For startups, particularly those in the early stages of development, obtaining SME status with the EMA can significantly enhance their attractiveness to investors. Investors often view SME status as a positive indicator, signaling that a company is positioned to benefit from specific regulatory and financial incentives. These benefits can reduce development costs and expedite the time-to-market for new therapies and devices, which are critical factors for investors assessing the risk and potential return on their investments. 

Moreover, SME status provides companies with access to scientific advice and support services that are crucial during the early stages of product development at a fee which is 10% of the full fee.  An SME status will save you a lot of money, not only when you wish to get EMA advice but also when you approach European National Authorities. 

This access can help companies refine their development strategies, ensuring alignment with regulatory requirements and ultimately improving the chances of successful product approval. 

SME Status and Its Impact on Regulatory Affairs Milestones 

SME status is particularly relevant when considering key regulatory milestones such as the Paediatric Investigation Plan (PIP) and PRIME (PRIority MEdicines) designation. 

The PIP is a mandatory component for the approval of new medicines, even for those which are not intended for the pediatric population. For SMEs, the EMA offers fee reductions on PIP submissions, making it more feasible for smaller companies to meet this regulatory requirement without compromising their financial stability. 

Similarly, the PRIME designation is designed to support the development of medicines that offer significant advantages over existing treatments.   When submitting for PRIME designation, having an SME status reduces the burden of submitting clinical evidence at early stages of development. 

The SME office has many initiatives aimed to assist companies with an SME status, that include training sessions, publications focused on hot topics, availability to answer questions related to the procedures within EMA, etc. 

Conclusion 

The EMA’s SME initiative is an invaluable resource for startups in the biopharma, MedTech, and broader biotech sectors. By offering regulatory assistance, financial incentives, and educational resources, the initiative helps SMEs overcome the barriers to bringing innovative products to market. Whether you are a European startup or an international company looking to enter the EU market, leveraging the EMA’s SME initiative could be the key to unlocking success in these highly competitive industries. 

In 2023, loads of new companies popped up worldwide, for instance, around 600k in Germany and 52k in Switzerland alone. But here’s the kicker: about 75% of these won’t be around in five years. Why? It’s a mix of many reasons, such as cultural issues, employment challenges, lack of ambition, and inflexibility in changing their vision or strategy.  

If you aim to be one of the successful ones and want to go global, there’s a lot to think about. Planning is crucial, especially when it comes to finding talent, dealing with legal matters, and considering the political and economic stability of the countries where you want to set up shop. 

Let’s look at one market in particular – Switzerland. Breaking into the Swiss market, for instance, means getting a grip on the local business scene, especially from a Human Resources (HR) angle. Switzerland is well known for its economic stability and skilled workforce, making it a great place to grow any innovation business. However, setting up a legal entity means navigating specific regulations. Amongst others, I will focus on a handful of elements: 

Legal Entity and Workforce Structure 

Setting up a business in Switzerland requires right away a decision to be taken linked to the choices from a legal forms’ standpoint. You have forms like sole proprietorship, partnership, limited liability company (GmbH), or corporation (AG). Each option comes with different needs from an HR standpoint. For instance, the AG requires a formal structure with a board of directors, which impacts hiring executives and governance. Also, a need for registration in the Commercial register would come with it, providing details about founders, directors, and your business activities. 

Employment Contracts and Labor Law 

Swiss labor law, compared to some other European labor laws, allows a lot of freedom but also sets minimum standards. Employment contracts can be verbal or written, but written ones are better for clarity. These contracts need to include a job description, salary, working hours, and termination conditions. The Swiss Code of Obligations governs these relationships, ensuring protections like notice periods, paid holidays, and maternity leave. 

Work Permits and Immigration 

Switzerland’s labor market differentiates between EU/EFTA nationals and non-EU/EFTA nationals. EU/EFTA nationals have easier access, needing just a residence permit. For non-EU/EFTA hires, it’s tougher as you need to prove no local candidates are available and comply with quotas involving Swiss immigration authorities. 

Social Security and Insurance 

Employers must register employees with social security systems like the country pension insurance (AHV), disability insurance (IV), and occupational pension schemes (BVG) – all with contributions shared between employer and employee. Accident insurance is also mandatory. Understanding all of that is important to manage the payroll and ensure payroll compliance.  

HR Best Practices for Market Entry 

Effective HR strategies include thorough market research, understanding labor conditions, and offering competitive benefits. Partnering with local HR advisors can help navigate Swiss employment laws and cultural nuances. Implementing solid HR policies from the get-go can boost efficiency and morale. 

To sum it up, entering the Swiss market requires a detailed approach to setting up a legal entity and handling HR responsibilities. By getting the abovementioned basics right, companies can establish a strong presence in Switzerland and benefit from its skilled workforce for long-term success. 

The European bio-startup scene is a mosaic of invention, challenge, and opportunity where entrepreneurial spirit meets modern science in settings buzzing with activity. Over $54 billion financed over 1,936 deals in just the first half of 2024 indicates a startling 102% year-over-year rise.1 At the core of this ecosystem are energetic innovation hubs, notably in the UK, Germany, and Switzerland, home to leading academic institutions, research labs, and significant incubators and accelerators.2 Compared to the United States, Europe generates over double the volume of scientific publications, and a good share of worldwide biotech patents originate here.³ 

For every startup, but especially in the European market with its special mix of opportunity and challenge, growth and achieving scale are guiding stars. Based on my experience closely dealing with startups and SMEs, the most important obstacle these businesses encounter is a delicate balancing act between regulatory compliance, fundraising and collaborations with local institutions and experts. Success in this industry depends on a multimodal approach that needs to adeptly navigate all of its elements.   

Why the European Market Behaves as It Does 

So, what drives the unique dynamics of the European bio-startup market? 

To start, the European regulatory environment is arguably the most renowned. Each EU member state enforces its policies despite attempts to harmonize health technology assessments (HTA) across Europe, therefore generating a heterogeneous environment that requires careful regulatory preparation from the outset.^2,4 For instance, a startup creating a novel gene therapy with EU aspirations must navigate both the EMA’s centralized procedure and individual national HTAs. Following Brexit, the UK created its own regulatory system, led by the MHRA and NICE, which contains novel features such as the Highly Specialised Technologies Programme for quicker evaluations and a severity modifier for cost-effectiveness assessments. This difference obliges startups to use different registration and compliance approaches.⁵ 

For businesses with limited resources, especially, the intricacy of the EU regulatory framework may extend deadlines and escalate costs. However, unlike the more isolated and smaller UK segment, the possible reward consists of access to a large, unified market. 

The second most notable aspect is the cautious investing environment. Usually more risk-averse than their US counterparts, European investors choose projects with clear success potential and little risk. Startups following this strategy find themselves mostly dependent on non-dilutive financing sources such government loans and EU subsidies.⁶ These funding sources impact the growth path of European bio-startups in unique ways even while they offer necessary early-stage money. 

Similarly more orientated on risk reduction than on encouraging high-risk, high-reward technologies, are public funding policies in Europe. This conservative approach can impede innovation since bio-startups could find it difficult to get the required capital to grow rapidly. Late-stage financing often lags behind US levels, which drives European businesses to look for significant growth capital from American markets.^2,3 

Third, Europe faces a talent gap in dynamic fields that are meant to bridge biotech and business development. While notoriously having a strong foundation of research and development talent, Europe struggles with lower wages and difficulties in recruiting and retaining professionals experienced in both biotech and business. This gap can seriously impede businesses’ ability to scale and innovate, therefore complicating their path of development and the transition from lab research to market-ready products. 

Lastly, Europe’s different corporate cultures and regional competitiveness call for a customised strategy to market launch. Startups have to negotiate different business environments, usually needing local knowledge and connections to effectively enter individual markets. Europe’s diverse landscape consequently is a two-edged sword: it offers a rich basis for innovation but also presents major difficulties in realising this possibility for commercial success.  

Navigating the Choppy Waters 

Driven by its great research base, creative energy, and growing availability of early-stage financing, Europe remains a rich field for bio-startups despite these many obstacles. Success in this industry depends on a comprehensive plan including multiple strategies to skilfully handle this interplay of elements. Here’s a potential toolset for navigation: 

• Diversify Your Funding: Blend traditional venture capital with non-dilutive options. Think about hybrid funding sources combining government grants with corporate venture capital (CVC) and venture capital itself. Supported by parent firms, CVCs such as Novartis Venture Fund, M Ventures and Sanofi Ventures provide not only strategic alignment and access to significant resources and market channels but also financial support. 

• Forge Strategic Alliances: Larger company partnerships give access to market data, research resources and sophisticated technologies. High-profile agreements like Novo Nordisk’s $1.1 billion acquisition of Cardior and AstraZeneca’s $1.05 billion purchase of Amolyt Pharma, underline how important these relationships are in propelling development and achieving scale.¹ 

• Embrace Innovation: Research and development processes can be greatly improved by artificial intelligence and machine learning; they can help to simplify operations, save costs, and expedite the route from research to market. Companies such as MultiOmic Health are using artificial intelligence to transform clinical research. Being competitive as a founder depends on using such technologies. 

• Tap into Public-Private Synergies: Initiatives such as the Circular Economy Action Plan and the European Bioeconomy Strategy help government agencies and businesses to form partnerships. Since these alliances are especially successful in pooling resources and expertise from several industries to achieve thorough and sustainable development, they offer significant support in terms of funding, research cooperation, and market access. 

• Build Your Network: In the European biotech scene, your network is your net worth. The best venues for presenting ideas and creating relevant connections are founders’ events, Startup gatherings, pitch contests or, if you are not short on budget, industry events, trade shows, and conferences. Participating in dedicated networks and industry associations provides ongoing support as well as assets that are vital for market entry and expansion. 

• Navigate Cultural Waters: Create a culturally sensitive approach to business development and relationship-building. This could include funding cultural training for your staff or working with local professionals. What is effective in Berlin might not be in Barcelona or Bucharest. 

• Invest in Talent Development: Close the talent gap by working with academic institutions to establish co-op and internship programs, therefore generating a pool of qualified experts. Use remote talent and engage consultants or freelancers for specific expertise without long-term commitment. Engage in accelerator programs providing access to mentoring and expert networks. Using online courses and certificates, encourage your team to upskill to stay updated with the most recent biotech and business developments. 

Charting Your Course to Success 

The European bio-startup ecosystem requires a blend of scientific brilliance and business acumen wrapped in a thorough awareness of the European context. Remember as you navigate these waters that every difficulty in this environment has a corresponding opportunity. The stringent regulations push you towards excellence. The cautious attitude towards investments inspires creativity in financing. The diverse market teaches you to think globally from day one. 

Although the path may be challenging, bio-startups can not only negotiate their way into the European market but also significantly influence the worldwide biotech scene with a well-defined plan and flexible attitude. Success in this ecosystem is found in the capacity to be creative, cooperative, and strategically move within the unique dynamics of the European market, thereby transforming its complexity into a competitive advantage.

Lung Cancer is the second most common type of cancer and the number one cause of cancer death. The majority of patients diagnosed with lung cancer are already in the late stages and, therefore, have a poor prognosis with a five-year survival rate of only 10–20%. Diagnosing lung cancer at an early stage, before the cancer has metastasized, could increase the chance of providing effective treatment earlier and the survival rates dramatically. Two large RCTs have clinically proven that annual screening of the risk population through Low-dose CT (LDCT) reduces mortality by approximately 20%; the US-based, NCI-initiated NLST study and the European NELSON study, initiated by i-DNA, a Dutch research organization, dedicated to early detection of lung cancer. This positioned i-DNA and their scientific leader, Professor Matthijs Oudkerk, as the leading global group in the field. Based on these two studies, the use of LDCT has been recommended by health organizations worldwide. Countries throughout the world have begun to either adopt screening programs or are in screening programs pilots, like the Israeli Ministry of Health TIGAR program.  

One of the hurdles to the full adoption of the screening programs is the radiologist’s bottleneck, which is severe and only aggravating worldwide. Screening of lung cancer requires the interpreting radiologist to go over several hundreds of slides in the chest CT scan and detect each cancer suspicious “Lung nodule” – tiny objects the size of several millimeters, with the characteristics of probability of developing into cancerous tumors. This tedious work consumes a lot of time and effort and is subject to inter and intra-observer variability as well as human error. 

Given all these factors, the need for using AI-based tools to detect and manage lung nodules is clear. Indeed, there are publications confirming the good performance of AI in the detection, segmentation, and classification of nodules, and in LCS, AI as an impartial reader exceeds radiologists in negative misclassification results and reduces workload by up to 86.7%. And still, despite the clear need and the promising results, real clinical implementation is rare. Therefore, i-DNA, as the leading global organization promoting the implementation of screening programs, has initiated a new strategic project. Recognizing the barriers to adoption as the limited clinical evidence, lack of multi-center studies, and limited cost-effectiveness data, resulting majorly from the technological limits current AI technologies are bound to, as well as the need to create a benchmark of AI solutions to empower purchasers to make better-informed decisions, they have created a large comparative study between the leading AI models in the world. The project involves the two most important screening programs in Europe, 4ITLR and UKLS, with data gathered from leading medical centers in 8 countries. The project aims to generate the exact needed clinical and economic data to allow real implementation of AI technology in LCS and in the radiologists’ real-life clinical workflow. 

Genesis Medical Vision is an Israeli company developing an early detection of cancer AI platform. The company is pioneering deep IIMM technology, a completely new and different approach to AI in radiology, which allows the company to imitate and replicate the logic and intuition of physicians and build an algorithm accordingly. Thanks to that unique approach, the company believes it can solve all the technological barriers that have delayed and prevented the adoption of AI technology in the market until now. Genesis has finalized a clinical trial with its first product, the G4Lungs, allowing automated screening of lung cancer together with its design partner Assuta, showing results that facilitate real clinical adoption. The next step is to prove all these claims on a larger scale clinically, in a comparative study, and on the most important stage in the world. 

Genesis has partnered with i-DNA and is participating in this exclusive comparative study, which should pave the way towards the market and real clinical adoption in Europe but also in other strategic markets, such as the US.  

Welcome to the second issue of our online magazine, where we explore the dynamic and diverse landscape of European biotech and healthcare innovation. Our goal in this edition is to equip you with a foundational understanding of the European biosciences ecosystem, while also offering a wide range of perspectives and strategic insights that can help you navigate this complex yet opportunity-rich environment. 

Europe presents a unique set of challenges and opportunities for bio-startups and established players alike. In this issue, we delve into the critical aspects of operating within this market, from understanding the regulatory intricacies of clinical trials to the importance of maintaining a robust clinical supply chain. These are not just technical details—they are essential elements that can significantly impact your success in this region. For instance, our exploration of temperature-controlled logistics highlights how vital it is to ensure the integrity of investigational medicinal products across Europe’s varied climates and regulatory environments. 

One of the standout features of this issue is our deep dive into the German Digital Health Applications (DiGA) initiative. This program, which allows digital health applications to be prescribed by doctors and reimbursed by health insurance, exemplifies the innovative pathways unique to Europe. By understanding and leveraging these opportunities, companies can gain a significant competitive edge in the market. 

Our magazine is designed to be eclectic, providing you with a diverse array of points to consider, whether you’re a startup founder, an investor, or a seasoned industry professional. We cover everything from the differences in investigational product labeling requirements between the US and EU to the evolving interpretation of “second medical use” exceptions in patent law. These insights are more than just compliance guidelines—they are strategic advantages that can help you position your company for success in the European market. 

The uniqueness of the European market lies not only in its regulatory complexities but also in the vast opportunities it holds. Europe’s diverse ecosystem offers significant advantages, such as access to a large, unified market, but it also demands a deep understanding of its challenges. The personal experiences and expert opinions shared by our contributors in this issue underscore the importance of a well-rounded approach that blends technical expertise with strategic insight. 

As you read through this issue, I encourage you to reflect on the opportunities that Europe offers. Whether you are new to the market or looking to expand your presence, the knowledge and strategies presented here are designed to support you in making informed decisions. We hope that these insights will inspire you to embrace the challenges, seize the opportunities, and ultimately make a lasting impact in the European biosciences landscape. 

Thank you for joining us on this journey through the European biotech ecosystem. Here’s to the breakthroughs, collaborations, and successes that await us all in this vibrant and ever-evolving market. 

Warm regards,   

Roy