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The United Kingdom’s historic vote to quit the European Union (Brexit) after more than four decades sent shock waves around global financial markets last week, prompting Prime Minister David Cameron to resign. The pound plunged to the lowest levels (against the US dollar) in the last 31 years as the pro-EU campaign was defeated by more than 1 million votes.
But what exactly does Brexit mean for the pharmaceutical industry? This week, PharmaCompass looks at fives ways in which Brexit will impact the global pharmaceutical industry.
A new home for the EMA
The European Medicines Agency (EMA) is the European Union’s agency responsible for the protection of public and animal health through the scientific evaluation and supervision of medicines.
Headquartered in Canary Wharf, London, the Brexit vote could mean regulatory uncertainty and administrative headaches for drug companies in addition to the relocation of more than 600 full-time staff members based in the United Kingdom.
The EU nations haven’t been sitting idle. Countries like Sweden, Denmark, Italy and Germany have expressed interest in hosting the EMA instead of London, since drug companies in these countries are keen to be located close to the region's key regulator.
A relocation from London would, however, reduce EMA’s access to UK’s Medicines and Healthcare Products Regulatory Agency (MHRA) experts who reviewed more drug applications than any other domestic EU regulator in 2014.
A setback for the unitary patent initiative in Europe
At the moment, most applicants seeking patent protection in Europe use the “European patent” system – which requires them to obtain patents separately across 38 European countries. The European patent has nothing to do with the European Union.
To overcome this challenge, the unitary patent system was conceptualized. Once implemented, it will grant uniform patent protection throughout the participating 25 member states of the European Union, based on a single application.
It remains to be seen how the Brexit vote would impact the new unitary patent (single fee regime) and Unified Patent Court (single court) as London was set to be the home for the pharmaceutical division of the Unified Patent Court (UPC).
Under the current agreements, the unitary system can only come to life if ratified by a minimum of 13 nations including France, Germany and the UK, the dominant players in the European patent system. Following Brexit, conversations have started on how to ‘save the unitary patent system’.
Increased burden on UK’s MHRA
Over a billion prescriptions are dispensed and more than £ 2.5 billion-worth of pharmaceuticals are sold over-the-counter in pharmacies across the UK every year. The MHRA plays an influential role of collaborating between regulators and experts of all European member states in order to ensure quality and safety of the drug supply chain in the UK.
As a part of the EMA, the UK has witnessed approvals of around 40 new active substances every year. Moreover, the UK has utilized the information gathered by the EMA to continuously monitor pharmaceuticals marketed to the EU population (of around 500 million), which also generates over a million reports of suspected adverse drug reactions each year.
Some non-EU members like Norway still adhere to the EMA process and all its rules. The Swiss regulatory agency, Swissmedic, works alongside the EMA through mutual recognition and sharing agreements. However, if the EMA and its staff relocates, it remains to be seen how the UK will build an equivalent regulatory structure for an industry which has become truly global.
EU funding worth £8.5 billion for UK science at stake
The UK received more funding from the European Research Council than any other EU country supporting universities’ project-based research. It is estimated that 16 percent of the total research funding for the UK universities is from the EU.
A minister told the UK parliament’s science and technology committee that Brexit could threaten £8.5 billion worth of EU funding for UK science over the next four years. UK researchers are also at the risk of losing their priority access to scientific facilities across Europe and researchers may need to deal with obtaining work permits whenever they engage in research in Europe.
A currency impact
Currency markets are difficult to predict. However, on June 23 – the day the result of the Brexit referendum was announced – the shares of GlaxoSmithKline, UK’s largest pharmaceutical company, edged higher as it benefited from a weak pound.
The UK isn't a major market for pharmaceutical companies – it is estimated to account for 2.5 percent of the global pharmaceutical business. However, a weak pound will increase the price of medicines in the United Kingdom. It will also increase the cost of doing business in the country which is now a standalone region.
Our view
The overall impact of Brexit on the pharmaceutical world remains uncertain. However, it is clear that there will be major ramifications of the decision taken by a majority of the British people on their engagement with the European Union.
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Image Credit : Brexit by Mike Licht is licensed under CC BY 2.0
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