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Chaotic & Unprepared: British biotech industry waits for Brexit

By Joanna Fernandes, Analyst

Email: jfernandes@partners4access.com

#Brexit #UKBiotech

The United Kingdom’s  (UK) biopharma sector are in a precarious position, with less than 24 weeks to go, a no deal Brexit is becoming an increasing reality, forcing the industry to face a potentially, extremely difficult set of circumstances now and in the future.

The pharmaceutical sector is essential to the productivity of the UK, with an annual turnover of £41.8 billion. The European Union (EU) is a big contributor to this figure, with £11.9 billion worth of UK pharmaceutical exports going to the EU, equating to a market of 446 million EU patients and consumers.

Pharmaceutical companies have already been inconvenienced by the idea of Brexit, having to stockpiling an extra six weeks’ worth of medicines. The actual divergence from the EU and the MHRA’s (Medicines and Healthcare products Regulatory Agency) simultaneous departure from the EMA (European Medicines Agency), means UK-based pharmaceutical companies can expect further costs, more red tape and significant delays in approval and shipping of their products.

Increased costs for pharma following no-deal Brexit

A 2018 House of Commons report concluded that if the MHRA adopts a regime divergent from the EMA, pharma companies may face an extra cost of £45,000 for every new medicine released in the UK. One of the causes of this additional cost is the need for separate submission dossiers to the EMA and MHRA for regulatory approval. The MHRA are currently developing new IT systems, expected in March 2019, that manufactures will have to directly submit their documentation to, in order to market their drugs in the UK.

The MHRA has confirmed that training on the use of this new portal will be provided, however, technical issues in the set-up of the portal have already been reported. This will almost certainly lead to extra delays in its implementation, as well as for pharma companies as they become accustom to the changes and any teething problems.

In terms of procedural changes and particularly approval processes for new drugs, the MHRA is currently seeking comments on new legislation and regulatory processes in the event of a no deal. For medicines, that had been centrally authorised through the EMA, the UK government intended to “grandfather” their approval, to allow their continuous use in the UK. This means that all EMA approved products will also automatically gain UK approval status from the date of Brexit. However, this process has still not occurred, and this delay may add to serious disruption to medicines supply following Brexit.

While large UK-headquartered firms such as AstraZeneca and GlaxoSmithKline may absorb these extra costs and time-delays, small and medium sized enterprises (SME) that form the bulk of the lifesciences industry in the UK,  cannot.

Many SME’s cannot afford to put in place contingencies to plan for a no-deal Brexit, e.g. having a Qualified Persons for Pharmacovigilance (QPPVs) based in the UK and EU. This was advised by the EMA in June 2018, and in the UK government’s technical notices, the latest of which was published this month. AstraZeneca and GSK have announced their intention to build batch release sites in the EU, to ensure smooth operations in Europe following Brexit. This will likely “cost tens of millions of pounds” and setting up a new facility could take up to 3 years.

In the event of no cooperation with the EMA after leaving the EU, analysis by the Office of Healthcare Economics puts the potential cost to a large UK pharmaceutical at £49.6 million in implementation, and £36.4 million in annual costs. This, as well as, the potential tariffs on new medicines being imported and exported through Britain, as the UK is rejected as an independent member of the World Trade Organization (WTO) and disruptions to the supply chain could cause millions of pounds worth of additional expenses.

Another hurdle to pharma’s medicine supply is the use of air freights to transport short-shelf life products that cannot be stockpiled, which was advised by the Department of Health and Social Care (DHSC) Medicines Supply Contingency Planning program. However, an aviation agreement with the EU is looking less certain according to Lucy Chadwick, the Department for Transport’s Director General. Therefore, this proposed supply method, along with the use of lorry ferries to transport medicines across the Channel, which is expected to decrease to 12% capacity for at least 6 months post Brexit, are decreasing as viable distribution routes.

Despite these supply chain difficulties, and a recent National Audit Office report stating that the UK cannot build the necessary infrastructure on its borders in time for a no-deal Brexit, Matt Hancock, Secretary of State for Health and Social Care delivered a blow to the industry as he said that  “it still is the responsibility of the pharma industry to deliver their contracts”.

Big Pharma is already backing away from the UK market as it, according to Johnson and Johnson, struggles to maintain its priority status and it is “unlikely whether globally minded business would see a viable option to make this investment for a UK-only market authorisation”. US companies, Eli Lilly and Merck Sharpe Dohme (MSD) reported to the House of Commons that the companies will likely focus on larger markets, with the UK becoming a less attractive proposition. But for British SME’s retreating from the UK market is not a viable option.

So, what can British SME’s do to mitigate the risks of Brexit?

One – start preparing as best they can with continuous dialogue with British health authorities, to stay up to date with the latest recommendations and expected changes. We would advise companies to implement strategies to mitigate any significant disruptions in their supply chains and be ready for a no deal. As well as being aware of the impact on operations, their clients and suppliers to have adequate contingency’s in place, recognizing the worst-case scenario, whilst hoping for the best outcome.

Two – have a member of their team dedicated to understanding the new MHRA submission portal once it comes online to reduce time delays for marketing approval.

Lastly – be optimistic! there is opportunity among this chaos. With fewer international companies focusing on the UK market, it provides smaller biotech’s an opportunity to thrive. Additionally, with the possibility of a longer transition period, the extra associated costs may be more evenly distributed over time, allowing more time for mitigation and adaptation to the changes.

Partners4Access will continue to analyse the impact of the Brexit proceedings closely over the next few months. If you would like to hear more or have specific issues on Brexit that you would like to discuss, please email us at contact@partners4access.com

 

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