The British Government’s insistence that it could cope with a “hard Brexit” flowing from a failure to reach a post-Brexit deal with Brussels has prompted a swift rebuttal from the UK’s multi-billion pound pharmaceutical industry.
Drug-making giants say that a “no deal” scenario would accelerate the brain drain they are already suffering because of Brexit and cause regulatory problems that Theresa May’s Government does not seem to have contemplated.
The Government’s claim that it is already bracing to cope with a “no deal” Brexit has been undermined by the widespread observation that it is not working on new customs facilities or lorry inspections points near ports such as Dover.
The pharmaceutical firms make a similar point, noting that if the Government was indeed preparing to cope with a “no deal” departure from the EU in April 2019 it would now be racing to hire the hundreds of specialist experts needed to create its own regulatory agency to replace the EU’s European Medicine Agency in just over a year’s time.
The European Commission and the European Medicine Authority have warned that in the event of no deal, UK drug firms may face new regulatory requirements. Firms would need to obtain authorisation from one of the 27 remaining EU Member states in order to sell their products in the European Economic Area. The UK would also need to establish its own regulator to ensure the safety of the drugs produced and sold in the UK. That concern has led the Association of the British Pharmaceutical Industry (ABPI) to warn that it could take several years to establish a UK-based regulator.
The European Medicine Agency declared that in a “no deal” Brexit pharmaceutical products moving between the UK and the remaining 27 EU members would be treated as exports and thus subject to customs checks.
Tough Diagnosis
Jianwei Xu, a visiting scholar at the European think-tank Bruegel has claimed that such customs checks could impact trade due to the short shelf-life of pharmaceutical goods.
He highlighted a report by the Institute of International and European Affairs which showed that for time-sensitive industries, a customs delay of even one hour could result in a 0.8% increase in trade costs and lead to a 5% drop in trade.
Therefore, in the event of no deal, the pharmaceutical industry may be severely impacted by the increase in cross-border bureaucracy when seeking to trade with Europe.
A number of pharmaceutical giants have voiced concerns about Brexit, with the CEO of Astrazeneca, a global firm with a major presence in the UK, refusing a request to sign a letter supporting Theresa May. Instead he said that because of the poor progress on Brexit the firm was making its own plans for a “no deal” scenario.
Glaxosmithkline, which has about 16,000 employees in the UK, has lobbied the Government for at least a two-year transition.
The ABPI has complained that the uncertainty caused by Brexit has made it difficult to attract and retain talent from overseas and there are major fears about the implications of Brexit on the future movement of workers. Citizens of the other 27 EU states make up 17% of science, technology, engineering and mathematics academics at UK research institutions, meaning that a large proportion of the talent pool for industries such as pharmaceuticals depends on immigration.
The staffing problems are compounded by the slump in the pound since the Brexit referendum, making it difficult to attract global researchers when competing with rivals such as Germany and the US, which can rely on a strong euro and dollar.
A study by KPMG found that as a result of the weak pound and the immigration fears some 43% of EU nationals working in Britain’s science and pharma sector were leaving or considering leaving Britain in the aftermath of Brexit.
The industry’s top executives fear that without the skills of EU nationals and open access to European markets the global standing of pharmaceutical firms that remain in the UK will be in jeopardy, and the Government’s talk of a “no deal” Brexit is making the diagnosis even worse for the industry.
by Thomas Chambers
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