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Why U.S. pharmaceutical company Teligent chose Estonia as their beachhead to the EU?

Their consultants proposed the usual headquarters hotspots like Ireland, the UK, Switzerland, and the Netherlands; however, Jason suggested them to look at Estonia. At first they said: ‘Where?’ Then they said: ‘That sounds really exotic.’ But when they crunched the numbers and looked what the structure is to support the business, it made a lot of sense.

U.S. pharmaceutical company Teligent opened a development lab in Tallinn. It is Teligent’s only unit outside the US. But the 1 million euros spent on the lab is just the beginning of the US company’s investment in Estonia. Teligent is a company mainly focusing on producing generic drugs. After Teligent acquired Canadian pharmaceutical company Alveda Pharmaceuticals, it needed to start thinking how to create a really efective chain of supply.

Many companies producing the drugs for Teligent work in Switzerland, France and Germany. All those places are far from Canada. This means that Teligent needed a site in Europe for its lab, preferrably in a country with suitable law and tax environment.

Though other destinations were considered, including Switzerland and Ireland, the final choice was made for Estonia. In addition to the tax rate, one of the things that helped to choose, was the ease of administering a company in Estonia. The company is now run using Estonian e-Residency.

The lab situated at Tehnopol in Tallinn specializes in analytical chemistry, supporting the main lab in the U.S. The lab will have 12 employees hired from Estonia and provided with additional training at the main lab in the U.S.A.

Teligent’s CEO Jason Grenfell-Gardner told Life in Estonia Magazine why the company chose Estonia for a base in Europe.

What were the main reasons that made you choose Estonia instead of other locations?
Firstly, the simplicity of how we can run our business here. Four of our management team members are now e-residents of Estonia, and it makes it easy to do things. Secondly, obviously the structure relating to corporate tax is helpful as it allow us to continue to reinvest in our business across all our different operations. And thirdly, the quality of people we know and can find. It all made sense to pick Estonia.

However, you were acquainted with Estonia before. What is your connection to the country?
I started my journey into the pharmaceutical world in Estonia. I was a managing partner at Trigon Capital, responsible for the corporate finance team. We were doing a lot of mergers and acquisitions at that time. One of our funds had a controlling stake in a Lithuanian pharmaceutical company called Sanitas. Typical for that time, at the age of 24, I became a board member of Sanitas. It was a fascinating experience because the company was transitioning from the Soviet concept of good manufacturing practices to European concepts and practices, which were really quite different. The company was making all kinds of things, and that probably put in me this recognition that I really like making stuff. Spreadsheets are great, digital stuff is fun and the newest app is awesome, but making physical things that actually impact people’s lives is very, very rewarding.

Currently you are building a lab in Tehnopol by Tallinn University of Technology. How is that going?
It is an exciting process – the energy you feel at Tehnopol, and the commitment to really building something new. That sort of spirit is infectious. Currently we have two people supporting our business here; however, we are looking to eventually hire six to eight more people to work in the lab. And I am very pleased that there are highly skilled chemists to employ in Tallinn. What jobs are there for good chemists today in Estonia? There is the food industry, but beyond that there are not a lot of exciting and interesting new things that require chemistry skills to work. We hope to make a difference with Teligent. All in all, we are looking at our journey in Estonia in terms of building blocks of skills. We will start with a supply chain, logistics and all the standard operating procedures and the regulatory procedures required to help Canada and the US. Then we will add our new lab and science capabilities.

So you are literally using Estonia as your jurisdictional harbor in the EU?
Well, it is just that. It’s our longer-term beachhead to the EU. The EU countries have a mutual recognition agreement around regulatory processes, which means that we could build our portfolio of European pharmaceutical products through our team here in Estonia. We are starting out slowly and taking small steps, but it is really exciting to imagine where this might go.

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