‘Brexit a major opportunity for UK pharma’
Despite concern expressed by the pharmaceutical industry, Catalyst Corporate Finance argues that the UK’s decision to leave the European Union in fact represents a major opportunity for the country’s dynamic and world-leading pharmaceutical sector.
This confidence emerges from a recent announcement that two large pharmaceutical companies are investing considerably into UK research hubs, creating nearly 1,000 high-skilled jobs. This news comes as the Government prepares to publish its industrial strategy to reassure UK business ahead of departure from the EU.
Tom Cowap, a pharmaceutical specialist in Catalyst Corporate Finance’s healthcare Team says the dangers of losing access to European markets are greatly exaggerated and argues that the opportunities of Brexit far outweigh the potential risks.
Seven Brexit positives for UK pharma
1. The UK is a global centre of academic pharmaceuticals research
Pharmaceuticals companies depend on high quality research facilities to develop the drugs and treatments on which their future sales will depend. The UK is an international hub for such facilities, boasting three of the 17 most important clusters of life sciences research facilities in Europe.
2. These facilities have an impressive track record of collaboration with pharma Companies
These life sciences clusters have a long and impressive track record of working with commercial businesses to develop drugs that make it to market. Examples include Humira, co-developed in Cambridge, and now the best-selling drug worldwide.
3. R&D spending on pharma in the UK remains strong
R&D spending is the lifeblood of the pharma sector and is a top business spend in the UK. Almost half (47%) of all R&D spending in the UK is in the pharmaceutical sector, with charitable endeavors supplementing the R&D firepower of commercial businesses.
4. Brexit will cement the UK’s global leadership on pharma regulation
The UK’s Medicines and Healthcare Products Regulatory Agency (MHRA) is among the world’s most highly-respected and authoritative regulators, second only to the Food and Drug Administration (FDA) of the US. Currently, however, its focus has been on operating as part of the EU, where the European Medicines Agency is the primary regulator. The MHRA currently undertakes more cross-border authorisation work in Europe than any other country-based institution and will flourish outside of the EMA system.
5. Post-Brexit, the UK will be better placed to target the world’s most lucrative pharma markets
Supremacy for the MHRA will be a major boost for the UK as it seeks to develop individual trade agreements and authorization arrangements with the US – the biggest market for pharmaceutical companies and the highest spender – and the Middle East and Asia – where the market is growing most rapidly.
Regulatory harmonization is key to trade agreements in the pharmaceutical industry and this will be simpler and quicker to agree on a one-to-one basis.
Chris Watt, CEO of Qualasept Pharmaxo said: “The key to success post Brexit will be the speed at which the MHRA can achieve the fullest regulatory harmonization, supported by the government agreeing trade agreements with other territories. This will provide an exciting opportunity for UK pharma which has a comparative advantage globally.”
6. The EU will in any case want to agree a mutual authorization deal for UK pharma
Given the strong track record of UK companies in developing life-saving and improving drugs and treatments – as well as the attractiveness of the UK marketplace and the need to prioritize patient safety - the EU is likely to prioritize a mutual authorization deal with the UK post-Brexit.
This would mean UK companies do not lose out on sales to the EU.
7. The UK’s tax regime is especially favourable to the pharmaceuticals sector
The UK Government has promised to reduce Corporation Tax to 17% by 2020, one of the lowest rates in any Western economy. Moreover, through tax efficient schemes such as the Patent Box and R&D credits, many UK pharmaceuticals companies will pay an effective rate of between 11% and 13%