Brexit and the Pharma & Life Sciences industry - there will be change
07 July 2016
While the EU referendum result won’t bring immediate change, the pharmaceutical industry faces uncertainty following the result of the EU referendum. We know there are daunting challenges ahead and future changes in the environment as a result of Brexit are currently unclear, but there are some areas that the industry needs to urgently consider.
Throughout the life cycle of a drug, including after its launch, processes are guided by strict regulatory directives. While the UK has its own regulations governed by the Medicines and Healthcare products Regulatory Agency (MHRA), they largely mirror their EU equivalents. Currently the UK has significant impact on shaping these regulations and the future of this is uncertain. Clinical trials in the EU must comply with the Clinical Trials Directive and will soon be replaced by the EU Clinical Trials Regulation. This newer, streamlined regulation will apply from 2018 and aims to more easily facilitate larger pan-European trials. UK involvement in these trials may now become more difficult and costly if we are not part of these negotiations and discussions.
The European Medicines Agency (EMA), currently based in London, is responsible for the centralised authorisation procedure for medicines which results in a single marketing authorisation from the European Commission that is valid in all EU and EEA countries. The UK may no longer be part of this process and the MHRA may be equipped to perform the same task. The extra pressure on the MHRA will potentially slow UK patient access to medicines and there will be a need to create solutions to mitigate this consequence.
The pharmaceutical and life sciences industries directly employ 73,000 people in the UK, approximately 7% of whom are non-British EU citizens. Restrictions on freedom of movement could potentially cause a short term decline in productivity. Many academics and senior pharmaceutical staff who frequently move around Europe could be affected and companies may be considering how to lessen the impact of a possible brain drain out of the UK.
UK life sciences has access to a wealth of funding initiatives in Europe, including Horizon 2020 and the European Investment Fund. In fact, as of 2011, the UK was the beneficiary of 16% of the funding from one such initiative, compared with our contribution to the EU of 11.5%. Brexit may not preclude all access but it may restrict the UK’s access to these funds. The UK could also struggle to promote itself as a dynamic market for investment as it may no longer be a gateway to Europe. Foreign investment in UK life sciences, from the US for example, has often been with a view to access a wider European market.
We will have to see how some of these issues pan out. But for now there are some key things companies could consider doing:
- Communicate to your non-UK nationals to reassure them that they are valued. Consider sharing guidance on applying for permanent residency.
- Be prepared to answer questions from your investors - how may existing funding be affected and do you have alternative funding in place?
- Review your regulatory and clinical trials strategies to determine if they will work under the different Brexit scenarios and timescales?
- Begin to plan for uncertainty: consider scenarios for Brexit in the key areas of regulatory, labour, investment and fiscal then identify risk mitigation strategies and ask yourself "are we prepared?"
As Ian Powell, PwC's Chairman has said 'History has taught us that UK business is adaptable and innovative when confronted with new challenges and opportunities.' I am sure this will be true of the UK pharma and life sciences sector.