LS&HC Horizons 2022 - Flipbook - Page 62
Hogan Lovells | 2022 Life Sciences and Health Care Horizons
62
Europe
New pitfalls in EU pharma supply chain
The starting point of any supply chain is the manufacture of a product.
If manufacture of a finished medicinal product happens outside of the
EU, an import into the EU must be performed. For pharmaceutical
companies, this importation, as well as the further distribution across
EU markets, has to meet all the regulatory and customs requirements
while also considering internal tax optimization. This is particularly
important, for example, for ex-EU companies subject to favorable
tax, such as by a Swiss affiliate. For this reason, the physical product
flow and the legal product flow are often not in sync and regulatory
requirements may jeopardize tax optimization without careful planning.
Important new aspects for life sciences companies to consider in
supply chain planning include:
• The
European Commission no longer considers the act of selling by
an ex-EU entity to customers/affiliates within the EU as an act of
'legal importing'. However, some local authorities may still do so,
which would require the purchaser to hold a manufacturing and
import license (MIA).
• S
ome countries interpret gross domestic product rules in a way that
a wholesale distributor which procures and receives a product can
only do so from an entity holding an EU-granted MIA/wholesale
distribution license. This means, for example, that a local EU
affiliate could not easily buy product from a Swiss or a U.S. affiliate.
• The use of logistics service providers across Europe requires great
care to ensure that sufficient levels of control and involvement of all
companies in the supply chain are met.
• Local reimbursement laws may require that the entity selling a
product to local reimbursement authorities have a local presence.
However, while these new pitfalls arise, there are still ways to
compliantly structure a company's EU distribution system while
balancing taxes and other considerations. Using a branch office of
a non-EU company may help, as can structuring via a low risk and
favorable-tax entity in the Netherlands.
Hein van den Bos
Partner, Amsterdam
Dr. Jörg Schickert
Partner, Munich
Band One for Life Sciences in
Chambers Europe-wide, 2022
