In traditional fashion, some U.K. biotech officials and investors are displaying a stiff upper lip despite the vote in Britain yesterday for the country to leave the European Union.
Neil Woodford, fund manager for U.K.-based Woodford Investment Management, which includes biotech companies in its portfolio, maintains that the U.K. economy long term will not be severely affected by Brexit. However, “That is not to say there won’t be challenges in the near term,” he wrote on his blog. “There will. We now face a period of uncertainty as the exact terms of Britain’s exit from Europe are negotiated. Financial markets loathe uncertainty as amply demonstrated by this morning’s reaction across all asset classes.”
Woodford also predicts that the U.K.’s GDP will be lower over the next 18 months or so.
Steve Bates, head of the U.K. Bioindustry Association (BIA), echoed Woodford’s conclusion that there will be some short-term flux in both the Britain’s overall economy and in the biotech sector.
Key questions about the regulation of medicine, the terms of access to the single market, the disposition of talent and intellectual property, and the precise nature of the future relationship of the U.K. with Europe are now upon us, he pointed out.
But Bates also said that the U.K. biotech industry is fundamentally strong with innovative companies that have been well funded. He added that the U.K. has more novel therapeutics in the pipeline than any other country in Europe.
Others, however, are not so sanguine about British biotech and life science research. Oliver Wright, political editor for the Independent newspaper, writes that the country stands to lose many of its scientists to other countries as well as significant amounts of research funding due to Brexit. He cites estimates that R&D and high technology contribute about 7.6 billion pounds to the British economy each year and that the U.K. is awarded 25% of all European Research Grants, which will now be in jeopardy.
Karen Taylor, director of the U.K. Center for Health Solutions at Deloitte UK, says the country has long been a leader in scientific research and its commercial application. The pharma industry’s high productivity and a university system that graduates and employs thousands of top-tier scientists have been major draws for investment. But Brexit now poses serious risks to investments. These include the risk that unrestricted access to EU markets could be lost, as well as 8.5 billion pounds of EU funding for U.K. research. The U.K. also stands to lose membership in the European Union’s Innovative Medicines Initiative (IMI), “which supports collaborative research projects and helps build up networks of industry and academic experts to boost pharmaceutical innovation in the EU,” according to Taylor, who adds that both overseas and domestic investment will suffer if the U.K. no longer takes part in the IMI.
“With half of the funding for the IMI coming from the EU, the advantages lie not just in the money but in the ability to bring together companies and researchers from different EU countries to share knowledge and experience. Domestic research investment is likely to suffer if the U.K. was no longer part in the initiative,” she emphasizes.
Taylor also worries that there is now the question of whether the U.K. will remain involved within Europe’s regulatory framework.
“Currently the European Medicines Agency (EMA) can grant pharmaceutical companies a single marketing authorization, providing faster access to the whole of the EU market, half a billion potential patients,” she explains. “The level of disruption following a Brexit would depend on whether the U.K. remained part of the European regulatory framework. If not, the U.K. will have to resume separate authorizations and inspections, leading to duplication and delay.”
Taylor goes on to express concern that U.K. scientists could now lose their influence on scientific research and medicine.
“Most research and development facilities in the U.K. are staffed by people from across the EU, meaning pharmaceutical companies may find it more difficult to attract talent from abroad and retain existing talent,” she notes. “For example, if EU funding was cut to U.K. research projects, how quickly might academics desert the U.K. for countries with easier access to collaborative international research projects?”
The U.K. exit from the EU might also restrict Britain’s involvement in in pan-European initiatives that have been established to accelerate access for patients to innovative medical therapies.
“Brexit could also impact domestic drug access,” worries Taylor. “Pharmaceutical companies think carefully about their launch sequences, and an EU exit could see the U.K. slip down the priority list if companies have to jump through extra hoops to win approval there. The U.K.'s approach to market access and approach to pricing could compound the situation, making the U.K. a less attractive launch market and reducing patient access to innovative medicines.”
Taylor concludes Brexit seems to have ushered in an era of high uncertainty, “but what does seem clear is that there will be complex consequences for the pharmaceutical industry.”