Brexit viewed as negative for the pharma industry, Pharma Tech survey finds

Allie Nawrat 31 January 2020 (Last Updated February 10th, 2020 10:13)

Readers of Pharmaceutical Technology have been voting for whether Britain’s exit from the EU and into an 11 month transition period will be positive or negative for the industry. Although 35% of respondents believe Brexit will be strongly negative for the sector, the next highest result was the opposite – strongly positive – with 20%.

Brexit viewed as negative for the pharma industry, Pharma Tech survey finds
In the run up to 31 January, when the UK starts its transition to leave the EU, Pharma Tech surveyed readers on whether Brexit is positive or negative for the pharma industry. Credit: Shutterstock.

At 11pm GMT on 31 January the UK leaves the European Union (EU). However, under the terms of the ratified Withdrawal Agreement, this simply means the UK will enter an 11 month transition period during which it will negotiate its future relationship with the EU.

In the lead up to Brexit day, Pharmaceutical Technology surveyed readers on their view of whether the UK leaving the EU will be positive or negative for the pharma sector.

Results show a pessimism from the sector, with 35% of the 334 voters stating leaving the EU will be strongly negative for the pharma industry. However, the vote was not fully conclusive, with 20% of respondents stating they were strongly positive about the impact of Brexit on the pharma industry – this is consistent with the majority of pharma industry professionals saying a Conservative Party government would be best for the sector in a December Pharmaceutical Technology poll.

Almost exactly the same strongly negative results were seen for the medical device industry, demonstrating how intertwined concerns of these two, very closely related sectors are.

Uncertainty about details of future trade agreements

Since the 31 January only marks the beginning of the Brexit transition period, there is still significant uncertainty about how negotiations with the EU will progress and the impact these will have on pharma products. Until some of this uncertainty is alleviated, it will be difficult for pharma to view Brexit in a positive light.

The UK BioIndustry Association’s Brexit manifesto notes: “The UK’s membership of the EU ensures earlier access to medicines for patients, assures the UK’s global standing in delivering clinical trials and ensures the highest levels of safety and pharmacovigilance.

“Whatever happens, the UK’s future relationship with the EU must not impede the delivery of these priorities. The Government should seek the closest possible alignment between UK and EU on medicines and medical devices regulations.”

In addition, at the end of 2020, the UK will lose automatic access to free movement of goods within the EU. Although the UK now has a period of negotiation to agree a trade deal, until said deal is struck and ratified clarifying how trade of active pharmaceutical ingredients and pharma products will work in a post-Brexit scenario, there is no guarantee of avoiding shortages – one of pharma’s biggest concerns –in the UK and the EU.

Concerns about accessing talent

Not only will the UK lose access to free movement of goods from the EU, people will also no longer have freedom of movement between EU countries and the UK.

UK BioCity executive chairman Glenn Crocker notes that the main challenge the sector, and particularly life science start-ups, will experience post Brexit will be access to talent; he states that some start-ups have as many of 30% of their staff coming from mainland Europe, other figures place the industry average at 19%.

Crocker notes that although the government is aiming for will be a points-based immigration system that will prioritise people with PhDs, coming to the UK will require more paperwork and involve dealing with more bureaucracy, creating a higher burden for individuals.

A report published in September by marketing intelligence firm Infiniti also notes how important it is that the UK continues to be able to attract the best talent from outside its borders. Doing so will allow the country to retain its standing in the global pharma industry – the UK is in the world’s top 10 pharma markets and is home to two pharma giants, AstraZeneca and GlaxoSmithKline – and continue to grow in the future.

Pharma preparedness for Brexit

It has been three and a half years since the UK initially voted to leave the EU, and the pharma industry has been very proactive in preparing for a range of Brexit outcomes. As early as August 2018, when then Prime Minister Theresa May was still negotiating the UK’s withdrawal agreement with the EU, pharmaceutical companies were starting to stockpile essential medicines, supported by guidance from the Department of Health and Social Care.

Although uncertainty remains about the future relationship between the UK and its continental neighbours, no-deal Brexit is officially off the table, and the UK’s Conservative Government led by Boris Johnson has made clear its commitments to the NHS and research and development.

Further to this, uncertainty about Brexit since 2016 does not seem to have deterred continued investment into the UK pharma, and the wider life sciences sector. Crocker notes this, saying: “it is quite impressive how much progress there has been in growth and investment, despite Brexit and [associated] uncertainty”.

Considering opportunities for the industry beyond Europe

Another reason for the split vote in Pharmaceutical Technology’s survey could be linked to the opportunities leaving the EU presents for the UK to negotiate new trade deals outside of the EU.

There has been a lot of talk, particularly during the UK’s December election campaigns, about the centrality of medicines and the NHS to a potential trade agreement between the UK and the US.

It seems likely that if President Donald Trump remains in office after ongoing impeachment proceedings and November’s Presidential election, he will push for greater alignment between US and UK drug prices, and increased access to the NHS for US drug companies.

However, it is unclear if this is positive or negative for pharma. It might mean drug companies can ask for higher prices from the UK’s drug pricing regulator NICE, but it could also mean NICE will be forced to distribute funds less widely than it does now, and so fewer drugs will be able to be reimbursed for NHS use. The latter situation would be not be good for pharma, since it focuses on making profit through new, innovative products, not just on continued sales of existing products.