How Will a No-Deal #Brexit Affect the Life Sciences?

| October 21, 2019

After repeatedly assuring the nation throughout the referendum campaign that the UK would under no circumstances leave the single market, Boris Johnson is now desperately trying to push through the hard Brexit that voters were told would not happen. Despite being legally obligated to get either a deal or an extension, Johnson is insisting that the UK will leave the EU on October 31st, deal or no deal. This would have a devastating impact on the UK life sciences sector.

The UK in the EU

As an EU member state, the UK has enjoyed being one of, if not the most, important life sciences hubs in Europe. On the global stage, the UK has always been a very strong performer in both the life sciences and the pharmaceutical sector. After the US and Japan, the UK invests a higher percentage of its GDP into life sciences than any other nation.

Of the top six universities in the world for the research of clinical and pre-clinical health subjects, the UK hosts four, namely Cambridge, Oxford, Imperial College, and UCL. Until the referendum result, the UK was also home to the European Medicines Agency, the body responsible for the regulation of medicines throughout the EU. The UK has historically been one of the main architects of EU regulations on medicines.

The UK is also regarded as a world leader when it comes to public health. The NHS is still considered amongst the best health services in the world, even while suffering chronic underfunding and staff shortages. As an EU member, the UK has benefited enormously from the number of EU citizens looking to come and work in the NHS.

Finally, as a member of the European Union, the UK has represented a very attractive investment target for foreign businesses looking to get a foothold in the EU single market. This is because when compared to other member states, the UK has had some significant advantages. The fact that it is an English-speaking country is important, as English has become the de facto language of international diplomacy. Furthermore, employment laws in the UK mean that it is comparatively easy for businesses to identify, hire, and retain key talent. Also, the UK also has a very robust framework for protecting intellectual properties, which makes businesses less hesitant to pour large sums of money into R&D projects in the UK.

However, all of this is under threat. When the UK leaves the EU, even in the most optimistic scenario, it will suffer some serious losses and setbacks to the life sciences sector.

Regulations

With the regulators moving their headquarters out of the UK, it is inevitable that industry leaders will follow them to some extent. Even if businesses do not follow the regulators, the UK will lose a significant amount of influence and will most likely be left following EU regulations without having any say in how they are formulated.

This will have a number of knock-on effects, especially with regards to international investment. The UK will no doubt lose some of the competitive edge that it has enjoyed until now due to the fact that it will no longer be able to influence EU policy.

Changes in regulations won’t just affect the way that medicines are developed and sold, it will also affect how we approach research more broadly. UK research institutes routinely collaborate with institutions across Europe and in many cases share funding. Post-Brexit, UK research institutions will no longer have access to EU funding and it is likely that the collaborations with institutions across Europe will no longer continue leaving the UK lagging behind Europe.

Research and Development

When the UK leaves the EU, it will also withdraw from most of EU institutions. This means that the UK will effectively lose access to a multitude of potential funding sources overnight. Coupled with an expected drop in investment from the private sector, this could set the UK back by years economically speaking. Many life science start-ups, even those from the “Golden Triangle”, are concerned that Brexit may prevent them from raising capital from investors in Europe. Currently, we hear reports each week about European investment in UK  life science companies, for example Nidobirds Ventures has just announced investment in Antibodies.com, however, many life science start-ups are concerned that Brexit may prevent them from raising capital from investors in Europe.

The effects of serious disruption, even for a relatively short length of time, to the life sciences research and development sector could have profound long-term implications. The damage to the UK’s reputation for excellence in the life sciences would be instant and difficult to reverse. This, in turn, would discourage talented and knowledgeable people from around the world from choosing to work in the UK.

Supply Chain Disruption

One of the biggest challenges for the life sciences sector in a post-Brexit UK is going to be addressing supply chain issues. In the short-term, we are already experiencing shortages of certain medicines. Anecdotally, many patients have had to make do with equivalence drugs where the medicine they are prescribed is not currently available.

With the current ambiguity surrounding the circumstances of the UK’s departure, it is still very difficult to say with any certainty what the impacts on our supply chain will be. However, it seems that we can rule out any scenario where the flow of medicines between the UK and the EU continues as it is now. That means that there is almost certainly going to be some level of disruption.

If the UK crashes out at the end of October, there is a very real possibility that the NHS will struggle to cope within just a few months. Winters always place a significant strain on the health service, and a shortage of staff and medicines on top of the usual stressors might just bring the service to breaking point.

Aside from medicines, there will also be a difficulty in sending and receiving research supplies. We mentioned Antibodies.com earlier; they are just one of many businesses in the life sciences sector whose work will be made more difficult because of supply chain issues.

Pharmaceutical businesses are trying to mitigate the impacts of any supply chain disruption by stockpiling supplies. Patients and pharmacies have also begun to stockpile and ration their medicines. While these measures will provide some relief, it is already a point of humiliation for the UK that they are necessary at all.

Would Cancelling Brexit Solve Any of These Problems?

With the very real threat of no-deal now looming over us, businesses in the life science sector are faced with unenviable choices. Preparing for the future is difficult when that future is still so poorly defined. The life sciences sector is going to be hurt by Brexit more than most sectors if we crash out of the EU without a deal. Even if a deal is struck, the reputational damage is largely already done. Stopping Brexit would clearly solve many of the problems described, however it would also be accompanied by its own set of issues.

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