by GK Strategy 22nd June, 2017
3 min read

Will Brexit be the death of life sciences?

Brexit negotiations kicked off in Brussels in late June, with both sides squaring up to one another in an attempt to find a favourable deal for their side before the exit date of March 29, 2019.

Access to the single marketpassporting rights, and porous borders have all been treated as significant priorities to resolve in negotiations for UK businesses. However, in the case of the life sciences industry, the extent to which the UK will remain part of the EU’s life sciences regulatory and research agenda will be critical to the future growth of a sector which is central to the Government’s Industrial Strategy.

A question of influence

Life sciences in the UK is booming, contributing over £60bn into the economy and sustaining 220,000 jobs. In addition, the Treasury regularly allocates billions in ring-fenced cash for bodies such as the National Institute for Health Research, making the UK an exceptional centre for research and scientific excellence.  As such, while Britain losing a seat at the table on EU life sciences would be detrimental to our industry, the European member states are also likely to feel our absence unless a favourable deal is struck.

This is particularly true in the case of the European Medicines Agency (EMA), the regulatory behemoth which oversees medicines approval in the EU. Currently, the EMA is headquartered in London, employing over 600 people, and collaborating very closely with the UK’s own regulator, the Medicines and Healthcare Products Regulatory Authority (MHRA). Being based in the UK, the EMA benefits from an infrastructure and expertise particularly suited to the life sciences. In return, a close collaboration with the MHRA, which led the review of more drug applications than any other domestic EU regulator in 2014, ensures Britain’s interests are foremost when making decisions.

Where next?

Even if Britain negotiates for a European Economic Area (EEA) or European Free Trade Association (EFTA) style agreement, it is extremely likely the EMA will be obliged to physically relocate onto the continent. As a result, the decision on the best country to host the prestigious body is extremely fraught, with member states already squabbling only two days into negotiations. The nature of Britain’s continuing participation is less clear. The Health Secretary has repeatedly said he wants the “closest possible partnership” with the agency but many have speculated this will be difficult if the UK is not part of the single market.

What next?

The degree to which Britain will move outside EMA regulation is unclear. Regardless of whether they will adopt all, or part of the current system, if the EMA does not oversee the UK-based industry, EU member states’ access to UK life sciences services will undoubtedly be restricted, and vice versa. Restricted access to the single market would also prompt sizeable questions on its competitiveness globally and could see reduced foreign investment. That said, the MHRA, the Association of British Pharmaceutical Industry (ABPI) , Association of British Healthcare Industries (ABHI), the Department of Health and other key stakeholders are all keen to maintain consistency in regulation after Brexit.

What pharmaceutical companies will be keeping an eye on, and what the EU should be concerned with, is whether the UK’s regulatory environment – which is dependably efficient, ensuring fast and safe approval of increasingly complex protocols – can be replicated elsewhere.

The political environment produced by the general election will likely be beneficial to the MHRA’s efforts to ensure regulatory convergence with Europe.

The future of funding

Brexit has also thrown into question the future of different funding streams for life sciences research & development, not least Horizon 2020, the €80 billion European fund supporting scientific innovation.

Despite a commitment by the EU and the UK Government that Horizon 2020 funding would be available up to the day Britain formally leaves the EU and underwritten until 2020, many in the sector expected that in reality the awarding of funds by the European body would dry up for British companies.

However, evidence so far suggests that British companies continue to gain from this funding opportunity. The latest round of Horizon 2020 funding by the European Commission saw several British firms benefit.

Other funding streams, such as the transatlantic CARB-X fund to fight antimicrobial resistance (AMR), opportunities with the Wellcome Trust, and from Innovate UK should continue as before in post-Brexit Britain.

Yet the economic consequences of Brexit, after Britain’s formal departure, could hit cash flow to the sources and decrease the money being spent on R&D. The possibility of a ‘softer’ Brexit following the unexpected election result does limit the potential threat of such other funding pots being affected – but Horizon 2020 will eventually dry up.

Can Britain continue to be a life sciences hub?

More than any other industry, the future of life sciences in the UK is almost wholly dependent on maintaining its symbiotic relationship to the EU. If the regulatory system is even slightly out of step with that of the continent, it could discourage investment, reduce revenues and limit global competitiveness. Ironically, despite Brexiteers calling for a “bonfire of regulations”, it will arguably be keeping the red tape that will be key to the future success of the life sciences industry in the UK.

However, the EU has as much to lose with the loss of the UK as a partner, so we can expect both the MHRA and EMA to continue to work very closely together to maintain their mutually beneficial relationship. Whether those round the Brexit negotiating table are as constructive will remain to be seen.

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