It was assumed that three years after the referendum result, a solid Brexit strategy would be in place. Yet here we are less than a month from the latest departure date, and the future is still clouded with uncertainty.
The ambiguity surrounding Brexit has been a nightmare for businesses, causing severe disruption to individual traders and small businesses as well as multinational corporations. Every part of the British economy will suffer if the UK leaves the EU. In this article, we will look at some of the most immediate impacts on two sectors where the UK has traditionally been a market leader - life sciences and pharmaceuticals.
Loss of Institutions
The UK hasn’t yet left the EU but already our life sciences and pharmaceutical sectors have suffered. The European Medicines Agency has left the UK, along with the European Banking Authority. Not only does losing these institutions represent a loss of influence for the UK, but it also marks an exodus of talented and highly-qualified individuals from the UK job market.
Not only has the movement of these institutions drawn talented individuals away from the UK job market, it will also draw away the investment of entire businesses. Prior to the EU referendum, AstraZeneca invested around £500 million in the construction of a new R&D facility, which was soon followed by a relocation of their corporate headquarters. In a post-Brexit UK, it is hard to envisage investments on that scale for some time.
Just like in the banking sector, the titans of the pharmaceutical industry will want to be near to the regulators. Being close to regulators makes it easier to wine, dine, and lobby them. Being home to regulatory bodies has also given the UK significant influence on the development of regulations. This has been extremely useful for the pharmaceutical sector. Brexit will see the UK’s influence in these sectors begin to dwindle.
Regulatory Changes
As it stands, no one knows exactly what the post-Brexit regulations will look like for the science and pharmaceutical industries. However, any sudden regulatory changes could have numerous knock-on effects and send a shockwave through both sectors.
Not only will regulatory changes affect the way that we approach research and development, but they will also affect the ways that we market medicines and services both to patients and to medical professionals. These changes could make it difficult for pharmaceutical businesses to plan their marketing strategies. Until there is a clear picture of what the regulations will look like in the long-term, businesses can only plan so far ahead.
In the long-term, the UK may well find itself adhering to EU medicine standards without any say in how those standards are set. This would see the UK go from being the principal architect of such regulations, to having to abide by any future rules with no say in the decision-making process.
Labour Shortages
According to PriceWaterhouseCoopers, the UK pharmaceutical and life sciences sectors employ 220,000 people between them. Of these, 7% are non-British EU citizens. It looks very unlikely that the UK will continue to allow freedom of movement to and from the EU, meaning the UK will likely be leaving the single market. It is hard to envisage any scenario other than a significant drop in the number of EU nationals looking to live and work in the UK if this does come to pass.
Nowhere will these labour shortages be more keenly felt than in the NHS. The NHS is a pillar of British society and is quite rightly regarded as one of the most significant national achievements of the last century. However, the NHS is already warding off multiple crises caused by chronic underfunding. If the service also suffers from a sudden labour shortage, it could potentially bring the entire system to collapse.
Less Investment
PWC also report that pharmaceutical businesses invest the lion’s share (16%) of their total European R&D budget in the UK. Non-EU nations, notably the United States and Japan, have long seen an investment in the British life sciences sector as a reliable way of making inroads to the EU more widely. At the time they published their report, PWC counted more than 1,500 clinical trials underway in the UK.
With less than a month to go until the UK is supposed to depart from the EU, businesses still do not know what to expect in terms of a future relationship between the UK and EU. This is making it very difficult to justify any kind of large-scale investment.
According to Antibodies.com, who published a public business impact assessment, under a no-deal Brexit the UK would also lose access to numerous sources of government and private funding and would see a significant decrease in research capabilities. Quite simply, there is unlikely to be much room in a post-Brexit UK budget for the kind of funding levels required to maintain the current research output.
Reductions in Research
The UK has been a global leader in life sciences and medical R&D, but Brexit poses a serious threat to this status. Whether the UK will continue to participate in EU science projects still remains to be seen. If the UK does want to participate then it will need to be willing to contribute to the funding of these projects. A no-deal Brexit would see the UK no longer covered by the Unitary Patent and without access to the EU Unified Patent Court. This would mean that any disputes regarding patents would be far more difficult, costly, and time-consuming to address.
As briefly outlined, Brexit has already begun to cause damage to the life sciences and medical sectors in a number of ways. Even in the increasingly unlikely scenario where the UK leaves the EU with a deal in place, both of these sectors will pay a heavy price.
