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UK Pharma Awaits Fallout Following Brexit

Posted by Josephine Grace Aguilo | July 29, 2016

A month after the British people voted to leave the EU, difficulties for the pharmaceutical industry and risks in future investments have arisen.


In fact, more than 50 leaders in the pharmaceutical industry, including the CEO of GlaxoSmithkline (GSK), have expressed their concern about Brexit—as it could result in regulatory and business upheaval.

Since the UK government decided to invoke Article 50 of the Lisbon Treaty in the fall of 2016, the country has two years to wrap up its 43-year old affair with the EU. For now, the relationship will continue as normal, but experts argue a two-year negotiation process is too short, adding risk to the future of the pharmaceutical industry.

A Critical Element of the UK Economy

The pharmaceutical sector makes an enormous contribution to the UK’s economy when considering productivity measured in Gross Value Added (GVA). The industry has generated over 180,000 jobs, with revenue of over US $80M per year—not to mention the benefits of having 51% of its products made available across the EU.

Experts raise concern that the decision to leave the EU will lead to consequences in five areas: research and development, intellectual property rights (IPR), market access, regulatory impacts, and access to talent.

One thing’s for certain: Brexit will have an impact on research and development, as the United Kingdom has benefited from the research funding given by the European Research Council. Cutting ties will jeopardize the probability of winning grants from the ERC, as well as continuing important UK-European collaborations.

For business owners, Brexit creates immediate challenges in the area of drug regulation. The European Medicines Agency (EMA)—the EU’s equivalent of U.S Food and Drug Administration which approves treatment for EU countries—will have to be relocated, since an EU agency cannot be outside the union. Once relocated, the UK pharma industry will have to develop its own domestic regulatory system.

Another setback: UK’s pharmaceutical workforce may take a hit if immigration laws are changed. In addition, rumors have emerged that top EU pharma executives are declining offers from UK companies and are instead looking to serve big US and European companies.

The Positive Side

There is a possibility that the UK’s pharmaceutical industry could be successful outside the union—just like Canada, Switzerland, and Israel. The country will have greater control of its budget, and could secure more regulatory freedom by building its own regulatory body. In addition, they could prioritize a greater interest in medicinal approvals.

Time Will Tell

The future of the UK’s pharmaceutical industry will only become clear as time passes. This might not be the outcome industry leaders wanted, but as Steve Bates— CEO of the UK Bio Industry Association (BIA)—has said, the UK life science industry is a “resilient community, unfazed by challenges.” Much of what will happen depends on the appointed officials, and how industry leaders will work closely with the government.


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