The UK's exit from the EU will bring disruption to the pharma industry in 2019 – and any upside will remain in the future
On 29 March 2019, ready or not, the UK is set to leave the EU. Yet so far the two sides have not even agreed the terms of that departure or the details of the planned transition period, let alone any future trade deal. While the UK pharma industry has learnt to live with uncertainty since the EU referendum took place, it will soon need to cope with the disruption that even an orderly Brexit will bring. Most companies and regulators are already putting their contingency plans into action, and that process will gather pace in 2019.
On 1 January the European Medicines Agency (EMA) will start phase VI of its Brexit business continuity plan: the actual move from London to Amsterdam. The aim is for all staff to be in a new temporary building in the Netherlands by 30 March at the latest, while they wait for their new headquarters to be completed sometime around November 2019. "All staff" does not include the 30% or so who are expected to leave the agency. Their departures have already obliged the agency to scale back its activities.
Once the EMA has gone it will become wholeheartedly an EU institution, with no direct responsibility for the UK's medicines supply. That burden will fall on the UK's MHRA, whose experts are already being excluded from the EMA's work. Most international pharma companies will not find it so easy to make the split, however. They will still have a foot in both camps, so they need to keep medicine supplies flowing while minimising the Brexit effect on their EU business.
The EMA has already said that, unless a far-reaching mutual recognition deal is reached, from now on the UK and EU regulation systems will operate separately. Although existing medicines will not be affected, companies will need to seek approval, confirm batch testing and hold marketing authorisation in both the UK and EU markets for all new medicines. It is not even certain yet if UK clinical trial data will be acceptable in the EU after March.
So companies are already spending millions on measures to avoid the possible snarl-ups. For AstraZeneca, that means increasing its drug stockpiles by around 20%, as well as setting up parallel testing, licensing and supply systems in the UK and the EU. GSK is making similar preparations, as are Sanofi and Novartis. Smaller UK companies, which do not already have an EU office, face the unwelcome choice between setting one up or finding a willing EU partner. The costs of this work are considerable: AstraZeneca says it is spending $40m on the stockpiling alone, while GSK and Pfizer reckon the total cost at up to $100m.
There are also negative costs, in terms of lost investment, lost staff and lost clinical trials as companies suspend their plans. Recardio, for example, has pulled UK patient off trials for its candidate heart drug, for fear their data will not be usable. AstraZeneca has put a freeze on all manufacturing investment as of 2017, and says it will only review that once the Brexit terms become clear. Those decisions may be largely reversible once the final trade deal is agreed, but that will not happen quickly.
So for 2019, the focus will be on contingency planning amid yet more uncertainty, coupled with increasing day-to-day disruption. It will be hard for pharma companies to seize any long-term opportunities Brexit might bring. They may well exist – whether it is forging new trade deals beyond the EU, deepening research collaboration with the US and Asia, or streamlining regulations to ease access to medicines. But we are still unlikely to see more than a glimmer of those possibilities during 2019.
Ana Nicholls is director, industry operations at the Economist Intelligence Unit