Brexit clock is ticking loudly for UK pharma | KPMG | UK

Licencing pressure means Brexit clock is ticking loudly for UK pharma

Brexit clock is ticking loudly for UK pharma

Pharma companies might need as much as 18 months to establish a presence inside the EU in order to continue selling into the Single Market after Brexit, KPMG experts warn.

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Partner and Global Chair, Life Sciences

KPMG LLP (UK)

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Pharmaceutical companies holding regulatory licences or carrying out pharmacovigilance (PV) activities in the UK need to restructure before we leave the Single Market.

How can pharma remain compliant?

Currently, any pharmaceutical firm must meet various EU medicines authorisations in order to passport the sale of their products across the Single Market. These include marketing authorisations (with associated PV activity) as well as manufacturing, import and wholesale distribution authorisations.

Today, many companies hold these in the UK or through UK entities operating in other member states. Post-Brexit, UK companies will probably have to operate like any other non-EU established company and with no right to be registered holders. That means many UK companies will need to restructure to maintain compliance.

The European Medicines Agency (EMA) issued guidance for UK marketing authorisation (MA) holders in May 2017. This covers some, but not all, of the regulatory impacts of the UK leaving the Single Market. The EMA guidance was notably silent on the rules covering manufacturing, import and wholesale authorisations however. And in many cases, these will have greater implications for European supply chains than those for MAs.

Who is affected?

Any group that has a UK entity which holds inventories of medicines in an EU member state will be affected by the loss of passporting for manufacturing, import and wholesale licences.

Guidance issued by the EMA for MA holders also covers any group which has a Qualified Person for Pharmacovigilance (QPPV) or batch release site in the UK.

Solutions and timing

To transfer or re-register for authorisation to operate inside the EU after Brexit, companies must choose to either use a new or existing subsidiary, or alternatively establish a branch of the UK company. Several companies have opted for the branch option. It gives companies flexibility, and Swiss companies have a track record of using this approach to tackle the issue of sitting outside the EU.

KPMG has helped a number of businesses decide on the right structure, location and crucially the numbers and type of people and activities that need to move.

In our experience, UK entities that have a supply-chain footprint in the EU, restructuring takes at least nine months – and sometimes as long as 18 – to plan and execute. Such restructuring inevitably has implications for tax, financing and operating systems, which management need to consider up-front.

It is also important to note that while the UK is asking for a transitional deal with the EU giving companies until 2021 to prepare for these changes, unless the transition involves full regulatory equivalence and Single Market membership, the implementation date for restructuring remains March 2019.

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