The biopharma industry is becoming more optimistic about the effect of Brexit on UK research and manufacturing, according to a GlobalData survey, while the passing into law of the UK-EU Trade and Cooperation Agreement on 1 May brings a mixed outlook for the country.

The GlobalData survey ‘Brexit and the Healthcare Industry – 2021 Edition’ (GDHCHT265, April 2021) reveals the expectations of 150 global healthcare industry professionals surveyed from 8 February to 3 March 2021.

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Respondents from the US and UK were, overall, positive about the UK remaining an attractive destination for healthcare research and manufacturing after Brexit. While Brexit caused significant uncertainty for the UK’s healthcare sector, the UK’s government initiatives, such as the Medicines and Medical Devices Act 2021, provide much-needed opportunities to shape the environment for innovative healthcare post-Brexit. The Act, which became law on 11 February, aims to boost the UK’s healthcare industry by supporting access to medicines, regulation for novel therapies, clinical trials and innovation in healthcare, such as artificial intelligence (AI). The greatest scepticism was seen among European respondents, with only 24% seeing the UK as an attractive destination for healthcare research and manufacturing following Brexit.

The percentage of respondents who believed that the UK will continue to be an attractive destination increased by more than 10% this year in the UK and US compared with previous years. The pharmaceutical industry is well-known for its risk-averse approach. With uncertainty surrounding the new relationship between the UK and the EU, the majority of respondents in 2018 and 2019 were not confident that the UK would remain an attractive destination for the healthcare industry following Brexit.

This latest shift may have been influenced by the finalisation of the UK-EU Trade and Cooperation Agreement (TCA), as well as the Medicines and Healthcare Products Regulatory Agency’s (MHRA) intentions to join the US Food and Drug Administration’s (FDA) Project Orbis, a global programme to speed up patient access to innovative cancer treatments.

Even though the vast majority of the respondents from Europe remained negative, their positivity has increased by 10% since 2019, suggesting that the UK-EU TCA provided some confidence in the UK healthcare sector post-Brexit. Among reasons for pessimism, respondents cited regulatory complexities and ‘brain drain’ due to restrictions on free movement.

UK-EU Trade and Cooperation Agreement

The UK-EU TCA has been in provisional effect since 1 January and was formally ratified on 1 May. While it removed the prospect of a ‘no-deal’ Brexit, it introduced changes ranging from border checks to additional regulations for businesses based in the EU and UK.

The agreement allows free trade in pharmaceuticals for domestic sale but not for onward distribution to a third country. Businesses will need to be more cautious regarding their supply chains in order to determine whether their products can benefit from tariff and quota-free trade. “Companies with products originating from a third country are likely to want to avoid transporting those products between the EU and the UK, except for the purpose of sale in the second state, to avoid tariffs being payable a second time,” notes Alison Dennis, a partner at law firm Taylor Wessing, on the company’s website.

The UK and EU will mutually recognise each other’s good manufacturing practice (GMP) inspections and documentation, but the EU will not recognise UK batch testing and release certification of medicines. The UK will continue to accept European Economic Area (EEA) QP release until 1 January 2023. (For more, see ‘New EMA Headquarters Announced; Brexit Drug Manufacturing Guidance Released,’ B/POR, December 2017.)

While all existing EU marketing authorisations granted by the European Commission (EC) were automatically converted into the UK’s marketing authorisations, since 1 January, companies have had to follow different pathways in order to obtain marketing authorisations if they want to sell their products in both the EU and the UK.

The TCA secures the UK’s access to the EU’s €95.5bn ($114.4bn) research and innovation programme, Horizon Europe (the successor to Horizon 2020). The UK will, however, be excluded from the new European Innovation Council Accelerator fund, which aims to provide equity investments to start-ups, university spin-offs and small and medium enterprises (SMEs).

The EU’s updated Clinical Trials Regulation, expected to come into force next year, may not be incorporated into UK law, according to the MHRA’s current guidance. For clinical trials run in the EEA, the sponsor or legal representative must be based in the EEA and the trial must be registered on the EU Clinical Trials Register.