The outcome of today’s referendum on the UK’s continuing membership of the EU will have major consequences for the country’s medical device sector, according to industry research
For the healthcare industry to thrive in the event of the UK leaving the EU, the country would need to adopt a “uniquely British” approach, according to research and consulting firm GlobalData.
The company’s latest whitepaper states that for the pharmaceutical and medical device industries, Brexit would have significant consequences in five key areas, namely regulatory impacts, research and development, access to talent, intellectual property rights, and market access.
For manufacturers, the most immediate impact would be on the area of drug and device regulation, as a Brexit vote would be followed by a series of negotiations lasting two years.
“Given the time scales that life sciences operate, to suddenly enter a two-year negotiation process doesn’t sound like a long time, and that uncertainty makes the monetising of investments appear more risky,” said David Shaw, GlobalData’s chief operating officer.
Life science, including pharmaceuticals and medical devices, is a critical element of the UK economy, accounting for over 180,000 jobs and revenue of over $80 billion, according to UK Trade and Investment.
There are numerous potential ramifications of a Brexit vote for the healthcare sector.
For example, the European Medicines Agency (EMA), which is headquartered in the UK, is likely to be swiftly relocated to the EU.
There also may be immediate disruption of the regulation of existing medicines, let alone drugs in development.
“If the UK exits the EU, pharma companies could even exclude the UK when assessing commercial potential of drugs due to the much higher access hurdle.
“Instead, they might choose to focus more on the remaining EU, and treat the UK as an isolated country,” said Sean Hu, GlobalData’s senior vice president.
Despite the possible drawbacks of a Brexit vote, GlobalData believes the pharmaceutical industry could still thrive.
However, the UK would need to follow a different path from the likes of Switzerland, Canada and Israel, and establish a uniquely British solution.
However, a close vote to remain may also produce domestic changes and lead to regional variations in corporation tax.
As the major life sciences industry clusters in the UK are in the south east of England, south Wales and the central belt of Scotland, allowing regions of the UK to vary corporation tax could firm up and expand these regions of excellence.
GlobalData concludes that while it is difficult to envisage a positive outcome for the UK pharmaceutical industry in the event of Brexit, a close vote to remain may in fact provide a driver for great positive change in the industry.