Even though the final date of Brexit is just around the corner, the set of rules and regulations to guide businesses in a post-Brexit UK is still nowhere to be found. Whether a deal will be made, a No Deal Brexit will occur, or there will not be any Brexit at all (as slim as that possibility is), no one knows exactly. Although a lot of uncertainty looms, it is not wise for the business leaders to just let this whole situation play out on its own. The final day of separation may come as a shock to the firms who have been anticipating and hoping for a deal before Brexit. With no time to prepare, they may take a hard hit on their businesses.
Owing to the fact that the life sciences industry is highly regulated and the UK is a global leader in the industry, there is no doubt about the huge Brexit effect on life sciences in the country. The future of pharmaceutical and med tech firms is battling a deep uncertainty, which may result in dire consequences. With the date of Brexit approaching near and with the lack of clarity on new rules and regulations, all the involved life sciences firms should plan ahead to forecast the probable effects of Brexit on individual businesses. The companies should consider the possible alternative solutions to mitigate the risk that may arise in a post-Brexit world.
What problems will a No Deal Brexit cause?
If a deal is not finalized before 29th March 2019, there will be a huge effect on the movement of medicines and equipment across the border, including important lifesaving drugs too. The movement of goods from the UK to the EU may be considered as imports and could fall under additional regulations and costs; a horrifying situation for the patients in the middle of their treatments. According to a recent House of Commons report, without a Brexit deal for pharmaceuticals, roughly 446 million patients in the EU will be affected. Also, around 73% of UK’s pharmaceutical imports come from the EU.
This would subsequently have an unwanted dropdown effect on the insurance companies as well, as the cost of medicine will go up, and so will the cost of treatments. Since the people of UK are provided with one of the best healthcare plans in the world, it will subsequently lead to the higher price pressure on the payers. Essentially, a No Deal Brexit will have a multiplier effect.
The workforce of the companies will also be significantly affected. The fate of the people from the EU already working in UK is shrouded in doubt. Further hiring may also become costlier as the firms within the UK may have to hire a UK citizen only, due to immigration laws.
How can life sciences companies gear up?
To overcome the immediate Brexit impact on pharma, the pharmaceutical companies may start stockpiling medicines based on relevance and market usage.
With no obvious answer and certainty in sight, some of the life sciences firms have started to hedge this risk but at very high costs. Pfizer, a US-based pharma giant has predicted the cost of Brexit to be running up to $100 Million for them. Similar figures have been predicted by GlaxoSmithKline PLC, a London-based Pharma behemoth.
The supply chains for the major companies will be put to test. At present, the firms have an opportunity to reimagine and redesign their supply chains to be prepared for the consequences of a No Deal Brexit. One of the long-term solutions that can be considered is moving the manufacturing of various medicines and medical instruments out of the UK and into one of the EU-associated countries, so as to continue enjoying the production and trade benefits of the EU.
Impact of Brexit on healthcare industry of the Ireland will be immense, as it is not developed enough to be self-sustainable. Although the flow of materials and workforce will be restricted for all the EU countries with UK, the effect will be maximum for Ireland as the UK is their nearest neighbour and the only country they share a land border with. This problem however, may provide a unique opportunity for the life sciences firms. Paying focus on Ireland will not only be a good opportunity of expansion, but Ireland is also the nearest country to the UK that is part of the EU. Given the history between Ireland and the UK, it is possible that the rules may be relaxed for the UK-Ireland land border. They may follow something similar to that of Switzerland. Though being a non-EU country, Switzerland enjoys free movement of goods across borders.
Who will provide the solutions?
In such turbulent times, businesses will look up to the tech firms to ease out this process of separation. It is up to the leading technological firms to step in and minimize the impact of Brexit on the life sciences industry. For instance, the agile approach can play a huge role in these scenarios. With the workforce divided between Britain and the EU, agile will be able to help the businesses to still work as one unit effectively.
It holds no doubt that the ease with which the life sciences firms are able to get back to business as usual is directly dependent on abilities of the tech firms to develop unique technologies that account for the regulatory and other changes arising due to the potential No Deal Brexit on the horizon.
A further detailed analysis highlighting the impact of a No Deal Brexit on various fields such as R&D, clinical trials, and medical devices will be taken up in a subsequent blog/whitepaper. Stay tuned.