Startups, Pharma

UK life sciences industry grapples with new questions from Brexit spanning funding, regulatory landscape

The UK could lose investment from the European Investment Fund, a subsidiary of the European Investment Bank which aims to stimulate entrepreneurship and innovation and access to finance for European SMEs and mid-cap companies.

LONDON, ENGLAND - FEBRUARY 06: A general view of the London Skyline on a wet day on February 6, 2014 in London, England. (Photo by Chris Jackson/Getty Images)

Last week, Great Britain voted to leave the European Union of 28 member states, or “Brexit.” Since the result was announced sterling has fallen to a 31-year low, there has been a record daily drop in  global equity markets and political turmoil has broken out as the UK Prime Minister has said he will step down and the majority of the leadership team of the official opposition party has resigned.

Concerns have also been raised that the City of London will lose its place as a global financial center as UK-based firms will lose the passport to sell services and distribute products across the EU. Like finance, the UK pharmaceutical industry is heavily regulated and faces potential damage, which will depend on the exit deal that the UK government eventually negotiates with the EU. Before the referendum, more than 90 senior executives in the UK biopharmaceutical industry had signed a letter supporting the UK remaining in the EU.

Eleanor Biggs, Cardiovascular & Respiratory Therapy Monitors, at Ipsos Healthcare said in a blog at PharmExec.com that the industry employs 700,000 people in Europe, contributes around 10% of the UK’s gross domestic product and generates more than £3bn ($3.95 billion) in trade surplus.

Steve Bates, chief executive of the trade body UK BioIndustry Association, said that despite Brexit the BIA remains committed to making the UK the third global cluster for life sciences. He said: “Key questions about the regulation of medicine, access to the single market and talent, intellectual property and the precise nature of the future relationship of the UK with Europe are now upon us.”

The European Medicines Agency, responsible for the scientific evaluation, supervision and safety monitoring of medicines developed by pharmaceutical companies for use in the EU is currently based in London but is now likely to be moved to another EU member state, most likely Denmark or Sweden. For example, at the weekend EU officials said they were preparing to relocate the European Banking Authority away from London.

The EMA is staffed by by regulators from the 28 EU member states and provides an approval that is valid in the European Economic Area (EU and Iceland, Liechtenstein and Norway). If the UK does not join the EEA, pharma companies would need to get a separate approval from the UK regulator, the Medicines & Healthcare Products Regulatory Agency, for new products in the UK.

Biggs said NICE, which develops guidelines and enforces pricing strategies for the UK’s National Health Service, is included within the European network for Health Technology Assessment. “Brexit would mean that NICE may no longer be included within this initiative and would lose access to this information, which could have a knock-on effect on treatment guidelines and the cost of medicines in the UK,” she added.

Investment and research

Karen Taylor, director with UK Centre for Health Solutions at consultant Deloitte, said in a blog that global pharmaceutical companies may cut investment in the UK if access to the EU single market is restricted.

Taylor added that the UK receives the most funding from the European Research Council for project-based research universities. Biggs estimated that Brexit could cost the UK up to £8.5bn of funding and investment in science over the next four years. The Times Higher Education publication has warned that 18 UK universities could lose more than half their research funding from competitive grants after Brexit.

The UK would also lose access to public/private partnerships such as the Innovative Medicines Initiative, which brings together industry and academic experts to increase pharmaceutical innovation in the EU.

Professor Sir Robert Lechler, president of the Academy of Medical Sciences said: “We must ensure the UK retains its globally competitive edge in a post-Brexit world by finding ways to sustain the strong research collaborations we have built with our European partners. As part of this, research will need access to funding sources to replace those put at risk by exiting the EU, as well as clear plans to maintain access to European research talent and mechanisms for scientific collaboration.”

The UK could lose investment from the European Investment Fund, a subsidiary of the European Investment Bank which aims to stimulate entrepreneurship and innovation and access to finance for European SMEs and mid-cap companies.

The EIF said in  a statement: “The EIF will actively engage with the EIB and relevant European institutions to define the EIF’s activity in the UK as part of the broader discussions to determine the future relationship of the UK with Europe and European bodies. At present, EIF will continue to act within its current statutory remit and will not change its approach to operations in the UK.”

The pharmaceutical industry has an international labor force so the loss of the ability to study, live and work freely across all the EU member states will make the UK less attractive to talented and skilled staff.

Law firm Bird & Bird said in a note that intellectual property laws are largely harmonized across Europe. The note said: “In order to avoid a regulatory vacuum, many of those EU regulations relevant to intellectual property and life sciences (especially pharmaceuticals) will have to be transposed into English or Scottish law, and those national laws which are based on EU Directives may also need to be reviewed to ensure they can still operate properly.”

Supporters of Brexit have argued that Brexit could benefit the pharma industry. For example, Switzerland is not part of the European Economic Area but has a successful pharma industry with global giants such as Roche and Novartis. Leavers have also argued that EU regulations, such as the 2001 Clinical Trials Directive, have made drugs more expensive and increased the time to market compared to the US.

Photo: Getty Images/Chris Jackson

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