Last week, Japan’s Ministry of Foreign Affairs issued an unusually direct warning of “great turmoil” in a post-Brexit scenario, including a potential exodus of Japanese drugmakers from the United Kingdom should the European Medicines Agency (EMA) leave London. The statement comes amid considerable jockeying between Spain, Denmark, Italy, Sweden and Germany to become the next headquarters of the EMA. And despite the uncertainty surrounding the implications of a move, the fact that the EMA’s relocation is going to happen is widely assumed.

Not only that, Japan, the world’s second-largest pharmaceutical market, warned that R&D investment funds may also shift from London to continental Europe, with the UK capital losing its appeal as a centre of pharmaceutical development. In short, the relocation of the EMA “could force Japanese companies to reconsider their business activities,” the 15-page statement said.

It also warned of a more “cumbersome or lengthy process for pharmaceutical approvals” in post-Brexit Britain, as well as an increase in red tape if the UK sets up its own separate regulatory and drug approval framework.

Japan’s statement went on to list several demands, aimed at protecting the interests of Japanese drugmakers operating in the UK. Among them: that the UK remains the site for the EMA, the UK should retain access to the European Union’s R&D budget, as well as a UK should remain a presence in Japan-EU joint research.

The statement clashes with the relatively soothing noises Japanese government R&D bodies had made thus far. In July, the president of the Japan Agency for Medical Research and Development (AMED), Makoto Suematsu, told Pharma Japan: “The importance of the UK in our efforts to maximize the pace of our medical R&D will remain unchanged.” AMED still plans to set up a London outpost this year.

However, unsurprisingly, Japanese drugmakers have been consistently against Brexit, seeing the UK as essentially a gateway into European markets, with the added advantage of English as its primary language. In May, senior executives at Eisai, Daiichi Sankyo and Shionogi signed an open letter to the EU warning of the risks of the UK leaving Europe.

The level of Japanese drugmakers’ presence in the UK varies. Eisai is among the biggest investors, having opened its first UK R&D unit in 1990 and recently expanded its GBP100 million European Knowledge Centre in Hatfield, which acts as its European operations hub.

Takeda, however, had already launched its global restructuring which will greatly reduce its UK presence in favour of Boston and Japan, by the time the UK leaves the EU. While Takeda has not clarified the number of UK-based jobs it will cut, it may reportedly reduce staff at its R&D unit in Cambridge, as well as the UK branch of its global development centre. Mitsubishi Tanabe’s European operations are also headquartered in London.

For the time being, there will be no quick or easy answer as to where, not when, the EMA will relocate. However, given increasing drug pricing pressure and generic competition at home, Japan’s major drugmakers are expected to adopt an increasingly outward-looking growth strategy, focused primarily on the United States.

Given the possibility of duplication of effort should post-Brexit Britain establish its own separate pharmaceutical regulatory framework, it really remains to be seen whether Japanese drugmakers think the national British market will be worth the extra investment. For the next couple of years, however, little is likely to change.

Sophie Cairns is a Senior Life Science Analyst for the APAC region at IHS Markit