Britain’s popular vote to leave the European Union seems likely to cause major disruptions for the drug approval process in the UK and across the channel in mainland Europe, analysts said Friday. There were also predictions that medical research funding will take a hit.
“The future structure of medicine regulation in Europe is now thrown into question,” said Steve Bates, CEO of the BioIndustry Association, a British life sciences trade organization.
The clearest impact of the “Brexit” vote on the life sciences sector is likely to fall on employees of the European Medicines Agency, which will likely have to relocate to another country, uprooting more than 600 people now working in London.
“No country has ever decided to leave the EU, so there is no precedent for this situation,” a spokeswoman for the EMA wrote in an email, adding that it’s “too early to foresee the implications of this decision” and that the EMA will share more when it has “concrete information.”
Alan Carr, an analyst with Needham, wrote in a client note that drugs currently being reviewed by the EMA won’t feel much impact in the near-term. However, moving forward, he said “Brexit will lead to a less efficient, and potentially lengthier regulatory process for companies seeking approval in the EU and UK.”
The EMA has enjoyed a symbiotic relationship with Britain’s own Medicines & Healthcare products Regulatory Agency, but in the wake of Brexit, the two organizations need to learn how to play separately.
A lot of regulatory work is still done on a national level, by agencies such as the MHRA, so drugs are able to get national approval before they’re sanctioned by the EMA. Bates estimated that the UK drug agency actually does about a third of the work underlying reviews by the EMA. The MHRA will have to fortify its internal drug review process, to make up for the absence of the EMA’s function. And, in turn, Bates said the European agency may lose out on benefitting from the MHRA’s strengths in patient safety regulation.
“It would be really unfortunate if those skills would be unavailable to the central EMA agency,” Bates said.
The UK life sciences industry will have some time to adjust, however, according to Jeffries analyst Brian Abraham: “For the EMA regulatory process,” he wrote, “… all will be the same for two years as the shift will be gradual.”
Brexit has been a major concern for the pharmaceutical industry for many months. Major UK pharma players such as GlaxoSmithKline (GSK) and AstraZeneca (AZN) have long argued that leaving the EU would stymie drug innovation.
The sector employs more than 222,000 people across the UK — a significant percentage from other EU countries — and the industry fears the migration of talent after separation from the EU. Furthermore, about 16 percent of the $4 billion UK life sciences firms spend on research annually comes from EU grants, so there’s worry that this money will be lost.
Global pharmaceutical companies, especially ones with headquarters or a presence in the UK, had voiced support for the “Remain” campaign leading up to the vote. A handful of pharma giants including Glaxo and AstraZeneca in recent months signed letters published in the British newspapers The Times and The Observer warning of consequences to their industry if the referendum were to pass.
The reaction from drug companies on Friday was resigned yet measured. Corporate statements referenced plans to watch and adapt to the new global order. AstraZeneca and GlaxoSmithKline both promised to “engage” in the process and work with stakeholders moving forward. Eli Lilly urged “the UK government to promote political stability.” And Johnson & Johnson (JNJ) said it aimed “to minimize any disruption.”
British venture capitalist Neil Woodford, who’s had a heavy hand in biotech investment, offered calming words on his firm’s website. Although there will be challenges in the near-term, he said that in ensuing years “the trajectory of the UK economy, and more importantly the world economy, will not be influenced significantly by today’s outcome.”
Bates mirrored that sentiment, with an aphorism that’s decidedly British:
“We’ve just got to keep calm and carry on biotech-ing,” he said.