Chris Stirling, Global Chair of KPMG Life Sciences, argues that UK pharma should aspire to the Swiss position.
To those predicting calamity for UK pharma after the Brexit decision I have a simple riposte: take a look at Switzerland. It sits outside the EU and European Economic Area, but is home to some of the world’s largest pharmaceuticals companies.
We can, and should, aspire to the Swiss position. As KPMG in Switzerland shows in its study of Europe’s top sites for life sciences, the UK already has the highest number of innovative biotech therapeutic companies in Europe and is second only to Germany for the overall number of life sciences businesses. But let us be in no doubt, leaving the European Union will significantly complicate the research, production, sale and distribution of medical products and drugs.
Continue reading below...
There is increasing anecdotal evidence that the referendum result is already having a chilling effect, as the UK’s seven scientific academies made clear in a recent joint letter. Life sciences must make it clear to government to the implications of lower funding for innovation or less collaboration with Europe.
I am also concerned about the regulatory impact Brexit will have on the development and distribution of products. The UK is likely to lose the European Medicines Agency – the largest EU institution based in Britain. It was also to have hosted the intellectual-property court running a ‘unitary patent system’ specialising in drugs and chemicals from 2018.
UK-based firms will lose the ease of ‘passporting’ marketing and licensing of drugs across Europe and will need licences to manufacture, import or hold inventories across Europe. Even where companies don’t have to pay tariffs (most medical products are tariff-free), every consignment might have to go through border controls.
Many of these issues are annoyances rather than deal-breakers, but I fear taken together, they will feed a perception that the UK will become a more difficult place to do pharma.
The UK has some important advantages in its world-class pharma infrastructure and expertise. It has one of the most competitive tax regimes in Europe and a government that has strongly backed the sector up to now. However, the job must start with the companies themselves. Their first responsibility is to acknowledge the scale of the challenge and tackle the issue head on.
To download the full version of this article, visit the Resources section of the EU Referendum Forum. The article can be found under 'Sector perspectives'.
© 2018 KPMG LLP, a UK limited liability partnership, and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved.