What does Brexit mean for the biopharma industry?

26 Apr 2018

Image: lonndubh/Shutterstock

While it seems unlikely that anyone will emerge from the UK’s historic exit from the single market unscathed, the biopharma industry both locally and globally could be in for an especially trying time.

The UK’s unprecedented Brexit decision has many far-reaching consequences that have been analysed at length in the past few years, while the deadline to leave the single market draws ever closer.

It’s a decision that will send seismic waves of change through almost all global industries, but it arguably will have one of the most intense impacts of the biopharma industry.

In 2014, the UK’s pharmaceutical production was valued at around €18.1bn, just trailing the value of Irish (€18.9bn), according to a Brexit Monitor report on the life sciences industry published by PwC. This report, published in 2016, made speculations fresh out the gate about what could be in store.

While it was difficult to make any concrete assertions at the time, certain topics cropped up as possible points of contention, such as how will the type of deal that the UK brokers affect customs and access to scientific funding? And what lies in store for UK-based clinical trials?

It has been a little over a year since Theresa May triggered Article 50 and began the withdrawal process. While she has ultimately failed to secure a deal as of yet – meaning it’s difficult to say with certainty what the biopharma landscape will look like – there are some things that we’ve learned since the referendum results were first announced that provide an insight into what is yet to come.

The EMA is upping sticks to Amsterdam

One of the most significant blows to the UK biopharma industry came when Amsterdam officially won the fiercely fought contest to become the new home to the European Medicines Agency.

The European Medicines Agency, in conjunction with respective national regulatory bodies, oversees all manufacturing, clinical trials and marketing authorisation of human and veterinary medicines in the EU. It was inevitable that the UK would be removed from the EMA due to Brexit, given that it will soon be designated as a “third country”, but the official finalisation of the move began to make the whole dizzying affair feel more real.

On a much smaller scale, it is likely that any UK citizens counted among the 900 people currently employed with the EMA will likely not be allowed to move to Amsterdam with the agency. When they cease to be EU citizens, it’s unlikely they’ll be allowed to remain employed with the EMA.

The Netherlands in turn, as one may expect, can expect a serious life sciences boost, as this relocation solidifies its position as a European pharmaceutical hub.

A regulation headache

The biggest headache that those in the biopharma industry will likely encounter post-Brexit is coping with divergent regulatory schemes when trying to roll out products to both the UK and the EU.

Life science researchers and clinical trial sponsors will have to navigate these different sets of guidelines, which could potentially increase study times and inflate costs.

As Paul Ranson from Morgan Lewis’s London life sciences practice points out, the UK will now miss out on the much sought-after Clinical Trial Regulation. The new regulation allows for a pan-EU clinical trial to be approved in one fell swoop, making deployment drastically more seamless.

Things aren’t entirely hopeless, Ranson stressed. The UK could broker a mutual recognition agreement similar to one enjoyed by Canada, Switzerland and Australia. This provides some glimmer of optimism, as Australia has had no trouble in attracting clinical trial studies despite existing outside of the EMA.

Yet the fact that the UK still is struggling to surmount basic logistical issues concerning its exit doesn’t inspire huge confidence that these kinds of industry-specific concerns will be addressed before 30 March 2019.

Ireland: possible medicine shortages?

In August 2017, Sandra Gannon, general manager of Teva Pharmaceuticals in Ireland, warned that a ‘hard’ Brexit would likely result in medicine shortages in Ireland.

“Already, 140 medicines are out of stock and we are at risk of further shortages due to Ireland’s dependence on the much larger British market,” said Gannon, quoted in the Irish Independent.

Gannon, who is joint chair of the Medicines for Ireland group, warned that border delays, customer costs and differing regulatory stances could all negatively impact Irish consumers.

“Every hour of customs delay adds to the cost of trade and it’s hard to see how such delays could be avoided if a hard border is reinstated.”

Though Ireland is a huge global player in pharmaceutical manufacturing, Gannon added at the time that many of the drugs made here don’t actually hit the Irish market. Prior to this, Ireland benefitted from both close proximity to the UK and also speaking English, which meant that large batches could be produced and shared between the UK and Ireland.

Everything – from medicine cabinet staples such as aspirin and cough lozenges, all the way up to innovative medicines for rare conditions – tends to come from across the Irish Sea. In total, Ireland relies on the UK for €2.9bn worth of pharmaceuticals, The Irish Examiner reported this year.

“Without the ability to batch-share, the small size of the Irish market may make it commercially unsustainable for manufacturers to supply to Ireland.”

More recently, the former Veterinary Ireland president John V O’Connor expressed concern that packaging issues could also lead to veterinary medicine shortages. “Potentially more than 50pc of our medicines are joint packaging,” he said, also quoted in the Irish Independent.

Staring into the void of the unknown

There is something uniquely disquieting about trying to portend what Brexit may bring. Analysis often goes hand-in-hand with speculation, and speculation is always made with the implicit caveat that anything can happen. But this caveat rings especially true in the case of Brexit, both in how it could affect biopharma and the world at large.

I think it’s fair to say that all of the negotiations post-Brexit referendum have been disorienting. Different sources will paint a different picture of how close the UK is to orchestrating its exit. The narrator is even more divided on how this exit will appear and how smooth this exit will be.

It is evident however that those in the biopharma industry have both grave and valid concerns about what lies ahead.

Those better acquainted with the minutiae of navigating international pharmaceutical regulation have made very well-reasoned arguments as to what could happen and have a pretty good idea of some of Brexit’s effects in isolation.

However, the quite concerning and unquestionably inconvenient truth about what lies ahead for biopharma after Brexit is that it’s still extremely up in the air. This is in spite of the fact that the deadline is in less than a year.

Unfortunately, those in the biopharma industry and beyond have no choice but to stare into a chaotic void of the unknown and hope that this decision will not manifest in significant costs and hardships to businesses and, more importantly, that it won’t lead to adverse effects for patients who need care.

The EU and UK flags together. Image: lonndubh/Shutterstock

Eva Short was a journalist at Silicon Republic