We are just days removed from Britain’s historic vote to leave the European Union. David Cameron has resigned as Prime Minister and the EU’s leadership has demanded he activate Article 50 exit talks to discuss the terms and conditions of its withdrawal.
The decision has created an air of uncertainty in British and European markets. One of the areas that may be most adversely affected is the pharma industry. The European Medicines Agency (EMA), which approves treatments for all EU countries, is currently based in Canary Wharf, London. Will this now be relocated?
British multinational pharmaceutical companies like Astrazeneca and GlaxoSmithKline depend on the EU for more than 25% of their revenues. How will Brexit affect their financial structures? The following blog will examine what Brexit could mean for the UK and EU pharma industry.
The pharma industry employs around 70,000 people in the United Kingdom. The result of the referendum has left many of these workers questioning their job security. In particular, thousands of EU workers are wondering how Brexit will affect their pharma jobs in the UK. This may remain unclear until the country draws up a new immigration policy.
Brexit will make it difficult for R&D facilities in the UK to attract and retain employees, according to a new report from Deloitte. It says new visa, resident and work permit rules could have a significant impact on the pharma labour force.
Unrestricted access to the EU market is crucial for global pharma multinationals. The EU has agreements in place with the United States, China and others on tax, trade routes, tariffs, etc. This makes it easier for companies to operate across jurisdictions. But what happens to the UK market when it is forced to negotiate new agreements?
As mentioned earlier, it seems likely that the European Medicines Agency will be forced to move headquarters. The association of Germany’s pharmaceutical industry has already released a statement calling for its relocation to a city within the EU. There had also been plans for a EU unitary patent court in London prior to the vote. It is safe to assume these plans will cease.
Regulation & Funding
Brexit will create a regulatory headache for UK-based pharmaceutical companies. For example, regulations for clinical trials, product approval, etc. are harmonized among all EU member states. But with the UK now free to set its own regulations, there are fears this could disrupt trade.
Scientists have also expressed concerns over funding for academic research. The UK is currently the second-biggest beneficiary of EU funding for research. UK researchers fear the government will be unable to fill this void post-Brexit. Additionally, researchers may also lose their access to scientific facilities across Europe.
Brexit could also risk Britain’s inclusion in collaborative research projects. For example, the Innovative Medicines Initiative (IMI) helps connect industry and academic experts across Europe. The EU provides half the funding for the IMI. Domestic research investment is likely to suffer in Britain if this funding is no longer available.
Access is one of the key issues post-Brexit. If the UK doesn’t remain part of the European regulatory framework, and the EMA relocates from its London base, considerable disruption can be expected. The UK must then establish separate authorisation and inspection protocols, which makes things difficult for companies trading to and from the UK.
It could also adversely impact domestic drug access. Pharmaceutical companies carefully plan their distribution strategies and an EU exit could see the UK slip down the pecking order. This is especially true if the UK introduces its own regulations. If the UK begins to be viewed as an unattractive launch market, it may reduce British patient’s access to innovative medicines.
The fear amongst pharma and health professionals in the UK is that British patients may be moved to the back of the queue for new medicines as companies prioritize the larger EU market. However, not all predictions are for doom and gloom.
Britain’s biggest drugmaker, GlaxoSmithKline, says the vote creates uncertainty but has very little impact on its global business. Indeed, it is unlikely to trouble many global drug manufacturers, since their largest markets are already the United States and Asia.
There is also hope that the UK could continue to take part in the EMA system if it remains in the European Economic Area, like Norway and Iceland.
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