A New Dawn: Building A Future For Life Sciences After Brexit

5 min

Given that the UK government has now served formal notice under Article 50 of The Treaty on European Union to terminate the UK's membership of the EU by March 2019, life sciences businesses must look ahead to a future that is certainly less certain than it may previously have seen. Senior staff fear there may be a host of changes in how global markets function within, and interact with, the UK. Large continental bodies such as the EMA (European Medicines Agency) will have to move, mergers and acquisitions will be trickier to navigate with both domestic and European legislation to navigate, and some fear that inward investment will slow as uncertainty reigns. Yet, despite all of this, opportunities for growth may be identified as government investment in the sector remains strong and the UK maintains a reputation as an excellent hub for life sciences talent in an industry that has previously proven ‘recession-proof’ and is therefore unlikely to become too volatile, even with changing conditions ahead.

For the time being, at least, the life sciences sector is no different from many others in that it is attempting a ‘business as usual’ strategy as negotiations continue. However, given the plans for the UK’s Brexit deal – as confirmed in January 2017 by Theresa May – are to leave both the European Economic Area (EEA) and the European Free Trade Association (EFTA) (a so-called ‘hard Brexit’), huge changes are set to take place. Life Sciences is one of the most highly regulated and globally synchronised industries, particularly when it comes to the development of pharmaceutical products. It is also one of the UK’s most globally respected markets; since the government launched its Life Sciences Strategy in 2011, it secured over £7.5bn of inward investment, leading to 18,000 new jobs and a domestic sector considered one of the strongest and most productive in the world.

Whether this high level of inward investment is likely to continue remains to be seen. Historically, many firms and investors have invested in the UK for its unrestricted access to both its sizable domestic markets and those of the EU, but this will obviously no longer be the case. Mergers, too, which have been a prominent feature of life sciences markets for some time, are likely to have more tricky legislation to navigate, as they will require vetting by both the UK’s Competition & Markets Authority (CMA) and the European Commission.

There are other concerns about the location of centralised EU authorities, previously located in the UK, which will now have to move. Chief amongst these is the European Medicines Agency (EMA), which approves drugs on behalf of all member states. This would allow companies to file for approval without having to go through the UK authorities, which will doubtless see their workloads increase exponentially after Brexit. The EMA, meanwhile, which employs 600 people, will have to find a new headquarters on the continent, moving from the London base it has occupied since 1995.

Product safety laws are another area which has caused some concern for life sciences businesses. The implementation of a uniform set of product safety legislation applicable across the EU has allowed advanced safety standards for consumers to be developed for imported and exported goods within the organisation. One such standard is the General Product Safety Directive, which provides a uniform product safety standard in situations where sector-specific legislation may not apply – a safety net for consumers and a benchmark for manufacturers and others in the supply chain.

In leaving the EU’s infrastructure, the UK would lose access to the centralised procedure for marketing authorisations, the EU clinical trials portal, and the Pharmacovigilance database. Of these, uncertainty about the future of the UK clinical trials regime has arguably caused the most consternation for British businesses and officials. A new European Clinical Trials Regulation is set to launch in 2018, which will modernise existing frameworks and harmonise and centralise the tricky process of clinical testing within the EU. This will enable a single application via a single portal with an associated EU-wide database. In losing access to this regulation, there may be additional administrative burdens on companies needing multi-centre clinical trials, with the prospect of separate national protocols having to be followed. This could, however, be avoided if mutual recognition arrangements could be agreed prior to the official Brexit date, which should be perfectly possible considering the current measured pace of negotiations in progress.

The Pharmacovigilance database will be another steep loss – the EU has won praise for turning what was a web of smaller agreements into a centralised, comprehensive legislation calling for brisk data collection, adverse reaction reporting, risk management, and transparency on marketing authorisation holders. Following Brexit the UK-competent authority would be dwarfed by the larger data sets of the EU, while the EU would lack data from the UK. It would be mutually beneficial to rectify this with a bilateral recognition agreement, but the game of politics may interfere. Some fear the EU will be keen to ensure the UK incurs the penalty of less cooperative measures and less sharing of expertise, to discourage other member states from leaving. But others think that to do so would be mutually harmful; the benefits of cooperative sharing of intelligence are clear, particularly in issues which directly relate to public safety and wellbeing, and the EMA is currently a very close partner of its UK equivalent.

And there are other reasons for optimism about the future of British life sciences. The UK government has certainly made reassuring noises about the future of science and technology – last November, the PM outlined an ambitious Industrial Strategy which pledged to boost research and development spending by £4.7bn in the years through to 2020. And London is not likely to lose its status as the European industry’s central hub. With Britain boasting a £64bn life sciences industry – the largest single market in the EU, accounting for approximately 25% of the life sciences & healthcare market - it’s hard to imagine the EU dragging their heels in ensuring continued trade with Britain post-Brexit.

And in a unique sense, post-Brexit market volatility ahead might actually play in the UK life sciences industries’ favour – sectors such as pharmaceuticals are regularly seen as defensive investments in times of turbulence. This was borne out immediately following the referendum result, when big hitters such as AstraZeneca, GlaxoSmithKline, Shire and BTG actually enjoyed a slight uptick in their share prices on the very day that other FTSE peers took a hammering. And pharmaceutical exports to EU countries – just one part of the broad life sciences trade portfolio the UK offers – generated £11billion for the British economy in 2015 alone. This level of influence in an industry often considered relatively ‘recession-proof’ (demand for medical innovation is never likely to fall) should ensure the UK and EU will each look to strike mutually beneficial deals, in this market at least.

With changing market conditions ahead, it’s never been more important for life sciences businesses to hire management and senior talent with proven track records, which will help navigate the complexities thrown up by Brexit in the years ahead. But finding these individuals is fraught with challenges, particularly as they won’t usually be actively seeking new work and their employers – if they’re smart – will work hard to keep them. With a large global network and a reputation for sourcing value-adding talent for hard to fill roles, CSG’s team of life sciences recruitment experts can act as the recruitment partners of clients and candidates alike, helping them build a talent strategy which will allow them to grow their operations. Forward-thinking businesses can then find opportunity, rather than difficulty, in these post-Brexit years of uncertainty and change.