The impact of Brexit on life sciences companies

After over forty years of membership, on 26th June 2016, the UK voted in the EU Referendum to leave the European Union – three and a half years later the “split” is now finally going ahead on 1st January 2021.

The terms of the UK’s exit are still being negotiated, in the final weeks of December 2020, on significant items that are fundamental to the UK economy. This article discusses the knowns and unknowns, and how companies should prepare for the post-Brexit world.

Trade

The potential loss of access to the free market, as outlined in the European Free Trade Agreement (EFTA), is one of the main risks to UK firms. The consequences of which would mean defaulting to the World Trade Organisation (WTO) terms:

It is estimated that the impact of Brexit on the UK economy could equate to a £75 billion loss if no deal is made.

However, whilst a member of the EU, conditions of the EFTA have impeded the UK’s ability to reach favourable agreements with non-EU countries, which may be alleviated post-Brexit.

Unfortunately, the negotiations are going to the wire and companies will need to react quickly to fulfil obligations on 1st January 2021 and ensure that their ERP systems can be re-configured to support the potential VAT and tariff changes.

Employment

The last decade has seen a net migration of over 1.5 million workers into the UK from the EU. These vital resources have filled significant skill shortages in sectors like hospitality and healthcare.

Companies should have completed all the necessary steps to ensure that their EU workers have the continued right to work in the UK. However, there is a predicted skills shortage expected, with recruiters already seeing a dramatic reduction in the number of candidates to fill vacancies in some sectors.

The Brexit challenge

£200

billion estimated spend on Brexit by the end of 2020

million EU citizens working in the UK

1.3

million British citizens working in the EU

759

treaties need to be renegotiated

1.3

million British citizens working in the EU

759

treaties need to be renegotiated

UK impact

estimated decline in UK domestic market post-Brexit

22%

reduction in foreign investment into the UK economy

9-15%

companies will face insolvency depending on the exit deal agreed

£753

billion loss to UK economy if no trade deal is struck with EU

9-15%

companies will face insolvency depending on the exit deal agreed

£753

billion loss to UK economy if no trade deal is struck with EU

New ways of working

Over the last decades, the UK has been the centre of life sciences in the EU, and UK-based companies have benefitted from unity in ways of working. Post-Brexit, alternative processes and procedures need to be established in the UK for the following significant areas:

Legislation

Provisions previously embedded in EU directives must now be replaced by UK law.

Clinical trials

Harmonisation with the EU and provisions for data protection are required – in particular for clinical trial and personal data.

Marketing authorisations

EU-wide procedures will no longer be available and applications will be processed by the Medicines & Healthcare Products Regulatory Agency (MHRA). Increased workload will likely lead to delays.

Quality Assurance and Product Safety

Processes will need to be replicated in the EU and manufacturers or importers of medicines will need to hold a manufacturing authorisation.

Pharmacovigilance

This system was coordinated by the European Medicines Agency (EMA) but UK companies will now need to revise their pharmacovigilance reporting system.

Regulatory Authorities

The EMA has moved from London to Amsterdam, as the UK will not be an EU member after Brexit. All UK regulatory activities will therefore shift to the MHRA.

Research & Development

Research and development in UK firms has benefited from coordinated research collaborations across Europe, as well as access to funding from the Innovative Medicines Initiative and Horizon 2020 (7-year program with €80 billion of funding).

The UK will lose access to this funding and may well see the loss of a number of talented researchers to research facilities in the EU. Currently, it is unclear if the UK Government will supplement the lost funding.

M&A Activity

With uncertainty in the UK stock market, there could be a downgrade in UK company share prices, causing an increase in ‘hostile’ merger and acquisition activities in the life science sector, particularly from foreign companies.

Supply Chain

Despite whether a Brexit trade deal is made, impacts on supply chains are expected due to delays in processing freight and inconsistencies in documentation. Companies must mitigate these risks by:

Helixr’s strengths

Our team at Helixr is prepared to respond to any changes and have the necessary skills to partner with your company to minimise the impact of Brexit and enhance your competitive advantage through our services:

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