uk drug industry fears brexit life sciences pharma biotech investment capex

It has been just more than a year since UK citizens took to the polls in June 2016 and, in a shock heard around the world, voted to leave the European Union (EU). That outcome set off a cacophony of dire economic predictions and warnings of all sorts of horrible things that would occur in its wake.

Business as usual

Well, so far, not so much has happened. For the most part, it has been business as usual. Then again, nothing official has really taken place yet in terms of Britain’s exit from Europe, better known as “Brexit.”

As the target date of the UK’s exit from the EU (March 31, 2019) edges closer, anxiety levels are creeping up for one of the UK’s major sectors–the life-science industry. The fact that Britain has put its trading relationship with Europe at severe risk, is becoming far more real. Europe is the UK’s largest customer for UK drug industry exports.

UK drug industry investment

According to a recent analysis of Industrial Info’s Pharmaceutical-Biotech Database, there are 132 active reported capital and MRO projects in the UK. The project reports represent a cumulative total investment value (TIV) of just more than $5 billion. That translates to a healthy project average TIV of $38 million.

uk drug industry life sciences pharma biotech capital mro projects

Click on the image to see a graph detailing life-science projects in the UK, by constituent country.

There is a fear that the drug industry majors will ease up on their traditionally strong capex investment in the UK, for both manufacturing and research facilities. The myriad issues brought up by Brexit only add to the burden of an industry already heavily laden with regulatory requirements.

Concerns about Brexit

A recent statement issued by associations representing the European and British pharmaceutical and life-science industry (including AESGP, EFPIA, EuropaBio, Medicines for Europe, ABPI, BGMA, BIA and PAGB) expressed concern. “In the case of an unorderly withdrawal there is a risk that all goods due to be moved between the UK and EU could be held either at border checks, in warehouses or manufacturing and/or subject to extensive retesting requirements. In fact, this would lead to a severe disruption of most companies’ supply chains. That in turn would lead to potential supply disruptions of life-saving medicines.”

The European Commission is warning that all medicines made in Britain will be treated as imports by the EU in the event of a “cliff-edge” Brexit. The drug industry will be forced to face a series of new regulatory obligations. A security and trade “cliff edge” is what could occur if the UK does not implement an arrangement to that allows data transfer with the EU to continue after Brexit.

The future of the European Medicines Agency (EMA), which authorises medicines for sale across the EU, is also on the table. Currently located in Canary Wharf, London, the 27 remaining EU states have made clear they are not prepared to allow the agency to remain on British soil after Brexit. It will have to move.

Source: Industrial Info Resources – 24 August 2017