Pushing Boundaries: How To Support Global Expansion

The prospect of global expansion can be appealing for life sciences companies looking to tap into new markets. This kind of growth offers the promise of a broader consumer base and access to diverse talent pools.

However, this journey doesn’t come without its challenges. As life sciences companies venture into unfamiliar territories, they can encounter a complex web of geopolitical, regulatory, and operational hurdles that could hinder achievement of their strategic objectives.

But by understanding and proactively addressing the intricacies of global expansion, companies can unlock new avenues for innovation, efficiency, and competitive advantage – even in the face of challenges. Smooth and successful global expansion in the life sciences industry relies on strategic financial planning, compliance, risk management, and operational efficiency. With the right preparation and strategy, companies can navigate the complexities of global markets and achieve sustainable growth.

Challenge: Navigating geopolitical and country-specific risks

International expansion introduces companies to a wide range of new uncertainties arising from domestic policies and regulations, geopolitical turbulence, and country-specific risks. Factors such as global instability and trade restrictions can force a company to change its decision-making, while factors like cultural differences can have a significant impact on its consumer-facing strategy as well as its internal organization. Life sciences companies interested in global expansion will need to not only monitor these risks but also understand their potential impacts.

Opportunity: Developing tailored risk mitigation strategies

Life sciences companies should be proactive in developing risk mitigation strategies tailored to their operational expansion plans and objectives. To build the foundations for a robust strategy, companies will want to consider conducting a comprehensive geopolitical and country-specific risk analysis to gain a thorough understanding of the unique challenges that each market presents. Such a strategic plan can help companies align with local market conditions and prepare for any potential disruptions.

Challenge: Adapting to new regulatory environments

Every jurisdiction will have its own regulatory framework. Companies expanding into new international markets will need to both comply with the existing regulatory environment and quickly grasp potential regulatory changes and headwinds. Maintaining compliance across multiple jurisdictions requires a deep expertise and understanding of international laws and regulations – and can present a significant volume of work for a company’s existing compliance team. And the stakes are high. Noncompliance can lead to legal penalties, reputational damage, operational disruptions, and strategic hurdles.

Opportunity: Bolstering a comprehensive compliance framework

Complying with new regulatory requirements brought by global expansion can present a daunting challenge. However, this significant milestone also can represent an opportunity to bolster a company’s existing compliance framework and function. For example, becoming subject to new consumer privacy regulations could incentivize management to perform a program gap analysis and a holistic revamp of a company’s overall compliance practices. Updates and improvements to supplier risk management and tax compliance programs triggered by new jurisdictional requirements offer similar opportunities.

Engaging a third party can help not only to fill in the gaps as a compliance team adapts to new requirements but also to identify potential areas of improvement and increased efficiencies. Bolstering a robust compliance function offers benefits across an organization – including helping to create a process-forward environment, improving efficiency and oversight, and enhancing reputation and building trust with stakeholders.

Challenge: Managing unfamiliar supply chain complexities

Global expansion often complicates supply chains, introducing challenges such as longer lead times, increased logistics costs, potential points of vulnerability, and the increased likelihood of disruptions. Coordinating supply chain operations across different regions requires careful planning and execution. Life sciences companies preparing for global expansion will need to address issues like varying transportation infrastructures, customs regulations, and potential geopolitical disruptions that can affect the supply chain.

Opportunity: Optimizing supply chain operations and risk management

Preparation is key in helping to overcome these supply chain challenges. To effectively mitigate the significant supply chain risks associated with global expansion, a company should consider completing a full-scale assessment of any new locations and the planned operational practices for these locations. A clear understanding of the environment will help management identify relevant risks and implement appropriate, effective controls to address and mitigate those risks.

In addition, a robust control environment can help a company manage short- and long-term costs. Management should consider putting measures in place to manage capital expenditures during the expansion process in order to closely monitor and control costs as well as to oversee vendor relationships.

Challenge: Navigating new financial reporting and tax requirements

As life sciences companies expand into new countries, they face the challenge of adapting to new financial reporting and tax requirements. Like the regulatory issues described previously, these requirements can be major hurdles to clear, and adhering to them can consume significant time and resources.

Opportunity: Accessing tax incentives and innovation support

As companies expand into new international markets, international tax planning and transfer pricing can become critical components in management’s global strategy. By proactively reviewing their operations, companies open up the opportunity to optimize their tax positions and strategically structure transactions.

Management can lay the groundwork for effective international tax planning by analyzing the tax implications of entering a new market, including understanding local tax incentives. Furthermore, adopting the right holding or principal structure can help drive efficiency in cash repatriation. Similarly, management can build the foundations of an effective transfer pricing strategy by analyzing intercompany transactions and market conditions across different geographic locations. Through careful analysis, companies can unlock value by aligning both tax planning and transfer pricing with overall business strategies while simultaneously mitigating tax risks.