Is Brexit Bad for Pharma in the UK?

Prior to June’s EU referendum outcome few predicted that the UK would vote to leave the European Union after 43 years of membership. For example, Whitehall was instructed by the Cabinet Office not to make any contingency plans for a vote to leave the EU. Even the then UKIP leader, Nigel Farage conceded that the Remain camp would probably edge it.

While legally, the referendum is not binding, and no formal process for leaving the EU has been initiated, the UK will probably start this process in the foreseeable future.

But is Brexit bad for Pharma? And what does it mean for the UK?

Corporations like predictability and the political repercussion following Brexit have been anything but predictable, which I won’t go into detail here.

There were fears that pharmaceutical companies such as GSK and AstraZeneca may seek to move their headquarters following the outcome of the EU referendum. Despite this, GSK has announced it is to invest £275m to expand its UK manufacturing sites, saying the country remains “an attractive location” despite Brexit.

However, there still remains years of pending uncertainty, regulatory change and other concerns to consider:

Policy and Regulation:

At a policy and regulatory level there is a huge amount of work ahead of us to transpose EU legislation into UK law, as a centralised European regulatory system will no longer apply. This job is likely to fall to the already under-resourced Medicines and Healthcare products Regulatory Agency (MHRA), which (ironically) currently receives EU funding.

The MHRA will likely align itself closely with the EU, but in the meantime this will disrupt companies selling products abroad. Even once the dust has settled, companies will need to negotiate their way through an additional layer of bureaucracy. As the UK accounts for just three percent of the global market, this may slow down patient access to novel medicines as companies may focus on launching products to bigger markets.

All this said and done, UK companies will still have to follow EU regulations to sell in the single market, but without having a say in setting those rules, potentially putting the UK at a competitive disadvantage.

European Medicines Agency (EMA):

What will happen to the London-based EMA, the European pharmaceutical regulatory agency? At present, the message from the EMA is: “No Member State has ever decided to leave the EU, so there is no precedent for this situation” so things will continue to operate as usual.

However, officials in Italy, Sweden and Denmark have all already expressed their interest in becoming host countries for the EMA. By moving its headquarters outside of the UK, some have argued this will reduce the importance of the UK in the eyes of the industry.

Clinical Trials:

Before the referendum, the UK was the most popular location for phase I trials (and ranks highly for phase II and III trials). This is now at risk of being undermined if the EU’s harmonised procedures no longer apply to the UK. There is also the question whether the UK would be allowed to participate in EU-wide projects or if EU researchers working in the UK, will continue to do so.

However, the Leave camp has argued that the existing EU Clinical Trials Directive has damaged medical research and innovation in the UK due to the administrative burden and cost of running academic clinical trials in Europe.

EU Funding:

Between 2007 and 2013, UK universities and businesses received €8.8 billion in direct EU funding for research, development and innovation activities, making the UK one of the largest recipients of research funding in the EU. Researchers may no longer be eligible to apply for EU grants.

European Commissioner Carlos Moedas has stated: “The referendum as such doesn’t change anything regarding their eligibility for funding under Horizon 2020, the world’s biggest research and innovation funding programme…As long as the UK is a member of the European Union, EU law continues to apply and the UK retains all rights and obligations of a member state.”

Many of our clients, based in the North East rely on European funding, which post-Brexit may need to be secured through domestic sources.

Working Together; Post-Brexit

Most agree that the result of the referendum will have an impact on pharmaceutical companies and their products. The extent of the implication on areas such as regulation, funding and research (to name only a few) will depend on how the UK chooses to redefine its relationship with the EU.

The pharmaceutical industry (this applies to the medical devices and diagnostic sector) is likely to bear the brunt of the political and social-economic instability from Brexit in the short-term, particularly from cuts if the UK falls into another recession at predicted by the experts.

But there is strength in collaboration. As change happens, it makes sense to pool resources and let experts guide you to safety and continued success. At Onyx Health we are well versed in handling the rigors of the healthcare market and change management. We’re committed to keeping our clients up to date with the latest regulatory and market changes, finding new ways to reach out to customers and seeking benefits from what lies ahead – removing this additional burden from the organisation.

If you want to find out more about our services, get in touch on +44 (0)191 6403638 or email info@onyxhealth.com