Brexit. A word known by many but understood by few. Out of the various sectors that compose the UK’s economy, what effect will Brexit have on the healthcare and life sciences industry?
Health and life sciences in the UK before Brexit
For many years, the UK has been at the forefront of pharmaceutical and biotechnology development, acting as a central hub for the major players in each respective field. Employing a staggering 500,000 employees and contributing over £70B ($88.5B) per annum, the life sciences industry has cemented itself as one of the most important pillars of the UK economy (gov.uk) – but will this remain?
The UK has always had a strong track record of providing a solid location for life sciences businesses, with tax incentives, investment & funding, R&D, and other key drivers on its agenda. Most importantly, however, are the trade agreements with EU-associated countries that benefit UK-based companies, as trading from a country within the union is incredibly easy and has no attached tariffs.
Brexit’s potential impact on these industries
After Brexit, the impact on the life sciences and healthcare sectors is largely dependent on what model the UK adopts for its relationship with the EU. In the most auspicious of outcomes, changes may be minimal if the UK remains in the European Economic Area (EEA), which is a trade agreement allowing for the EU’s single market to be extended to non-EU member parties, resulting in the ability for countries to still trade without any borders as if it were one big country. Another outcome could see the UK joining the European Free Trade Association (EFTA), and depending on whether negotiations on sector-specific access to the EU’s single market includes healthcare and life sciences, changes may be considerably larger and more detrimental to the UK industries’ trading capabilities.
In 2018, among the political angst that Brexit provoked, a steady erosion has been observed in the global biopharma industry’s opinion of the UK as an attractive place to base research and manufacturing. In a series of surveys, GlobalData asked key respondents from the US, UK, and EU markets throughout each quarter of 2018 (Q1–Q3), whether or not they thought that the UK will remain in its perch as a key place to do central business. In all markets, decreases in “yes” answers were observed; in the UK and EU markets especially, with abysmal rates of 17% and 19% respectively after Q3.
On the 11th of December 2018, voting was scheduled to commence in London at the House of Commons on a proposed deal for the UK to leave the EU constructed by its government. This deal would allow for the UK pharmaceutical regulations to remain under EMA authority after Brexit. However, one day prior to this, Prime Minister Theresa May postponed voting due to a lack of confidence that her proposal would be accepted by the Commons. Under Article 50 of the Lisbon treaty, which was invoked back in 2016, by law the UK must leave the EU no later than the 29th of March 2019 unless all 28 countries composing the EU unanimously agree to an extension. Without a set deal, the UK may be forced to leave the EU with a “no-deal Brexit,” agreeing upon nothing, which would throw the country’s economy into complete chaos.
Why is the government advising that you should stockpile your medication?
In the events of a deal not being struck for the UK’s exit from the EU, there will be no trading agreements in place for pharmaceutical medications and healthcare, let alone every single trading import that goes through EU trading agreements. As a countermeasure, the UK government so far has promised upwards of £50M ($63.2M) to UK-based pharmaceutical companies to stockpile medications, along with advisement that patients do the same in case no deal is agreed with the EU.
There are many possible outcomes that could occur by the time the UK is forced to depart. UK residents can only hope for a positive result, and that the UK remains as a pinnacle in the world’s healthcare and life sciences industry.