Two Labs Blog

Two Labs Blog

British Pharma Industry Faces Challenges Post-Brexit

Posted by Jessica Krauser on February 12, 2016

The British pharmaceutical industry is facing new challenges following the UK’s decision to leave the European Union, a white paper has revealed. Published by Global Data, it warned of wide-reaching impacts.

51% of Britain’s medicinal and pharmaceutical products are exported to the European Union (EU). But in June, a referendum indicated the UK should leave the EU – the so-called “Brexit”.

While Big Pharma companies emerged from the vote largely unscathed – some even enjoyed a small but immediate increase in their share prices – the result is likely to create challenges industry-wide, as a new white paper published by Global Data has forecast.

Question mark over drug regulation

Drug manufacturers will face an “immediate impact in the area of drug and medical device regulation,” explained Global Data in its paper.

The European Medicines Agency (EMA), which is responsible for the evaluation and monitoring of all drugs marketed in the EU, is currently headquartered in the UK. If it relocates to the EU when Brexit commences, companies may need to file for approval separately between the UK and the EU.

Then there is the EU Clinical Trials Directive. Although it is fully implemented into UK law, a new directive is expected to take effect in October 2018. Participation is necessary in order to gain drug approval within the EU.

Global Data warned that if the UK does not adopt the upcoming legislation, then the number of multi-center clinical trials in both the UK and EU is likely to be reduced, since “it will be very difficult and costly to integrate national trial authorization procedures with the new EU centralized trial authorizations”.

The issue of grant funding

Another big post-Brexit issue is funding and investment, as Britain’s The Telegraph reported. It explained that UK institutions and researchers receive a significant amount of European funding through grants, including Horizon 2020 and the European Investment Fund.

Up to £8.5 billion of funding and investment in UK science could be lost over the next four years, potentially isolating UK research and development and reducing its influence within the global scientific community.

In order to keep the money from these grants flowing, Britain needs to show why it is an attractive place to invest in life sciences, including pharmaceuticals and medical devices – a sector that accounts for more than 180,000 jobs and generates revenue of over $80 billion in the UK, according to UK Trade and Investment.

Mike Thompson, chief executive of the Association of the British Pharmaceutical Industry, told The Telegraph: “We have a fantastic asset, which is the NHS, and a fantastic science base. We need to connect those two together so the industry can see that as well as investing in our science base at the early stage of research, we have the potential for those medications to flow through the system [into commercialisation].”

Restrictions limit pharma workforce

Meanwhile, there is uncertainty surrounding the pharmaceutical workforce. If restrictions are placed on freedom of movement within EU countries, this could limit the UK’s reach across Europe’s skilled workers.

A PWC blog explained that around 7% of the pharmaceutical and life sciences industries’ employees are non-British EU citizens, warning that many academics and senior pharmaceutical staff who frequently move around Europe could be affected.

Swiss pharma industry sets example

It is not yet known whether Britain will opt for a “hard Brexit” or “soft Brexit”, with the latter being less of a threat to biotech and science, according to Forbes. It is however expected that the EU will make the terms of Brexit as harsh as possible, the site reported, “with little protection for biotech or science”.

Luckily, it is not all doom and gloom. Global Data cited Switzerland as the leading example of successful pharma and medical devices industries outside of the EU.

The country boasts low effective corporate tax rates and flexible labor laws, allowing for more liberal contracts, longer working hours, and reduced union involvement. Perhaps following in Switzerland’s footsteps, British Prime Minister, Theresa May, recently pledged to deliver the lowest corporation tax rate in the G20.

Global Data concluded: “The solution might lie in creating a uniquely British solution. The European Economic Area (EEA) has already been cited by commentators as an alternative approach for the UK to maintain access to the Single Market, albeit at the cost of accepting freedom of movement between the EEA and EU.”

Pennside Partners has also expanded its European presence with a new UK office located south of Manchester. Find out more here.

Topics: Big Pharma, Pharma Europe, Drug Development