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The Impact of Brexit on European Biotech and Biopharma

At the commencement of her national campaign in July 2016, the former UK Prime Minister Theresa May stated, “It is hard to think of an industry of greater strategic importance to Britain than its pharmaceutical industry.” This still holds true today. Despite this, according to the Freedom of Information Act, as of 2017, the number of EU academics and staff departing the United Kingdom was up by over 35% compared to years prior. In fact, many companies, Biotech included, have been leaving the UK for the Netherlands only adding to the loss in revenue.

As a direct consequence of poor planning, foresight and a general inability to recognize the obvious, the unfortunate consequences continued. By January 2018, the European Pharmaceutical Review disclosed that it was unable to fill most senior positions at UK life sciences companies. To compound the issue, applications for non-UK nationals decreased from 40% to a meager 15%.

One US-based medical research firm even suspended its clinical trials in the United Kingdom due to the uncertainty in the approval process of medicines and the acknowledgment of data by the European Medicines Agency (EMA).

What Does Brexit Mean for Clinical Research?

Until the beginning of the new year, scientists will still be allowed to accept jobs, apply for research grants, and travel freely between the UK and other European countries. But even with this grace period allowing for some business to take place, the to-do list leading up to the end of the year is ambitious, to say the least. The UK’s role in the future of EU science hangs in the balance. Let’s take a broader look at how Brexit could impact European biotech in the future.

Key Implications on Biotech and CROs

As it stands under the European Union membership, the UK is currently integrated into the European Medicines Regulatory Network (EMRN) which also includes the European Medicines Agency (EMA). But if no deal is reached by the end of the year, the UK’s relationship with the EMRN would be terminated. This would leave the Medicines and Healthcare products Regulatory Agency (MHRA) to take over for the EMRN when it comes to medicines and biotech in the UK market.

The UK Life Sciences sector employs over 200 thousand people and generates more than £60 billion per year. According to the National Institutes of Health (NIH), “The status of the Regulation in the post-Brexit UK is uncertain. The EU (Withdrawal) Act will convert EU law into UK law, including the vast array of EU life sciences regulation. However, the Regulation is likely to be implemented after the United Kingdom leaves the EU, but within the transition period. If the United Kingdom is not part of the legal framework governing clinical trials in the EU, then the United Kingdom will still need to comply with the global framework set out in the International Council on Harmonisation if it wants to be part of trials of medicinal products for which marketing authorization will be sought for licensing in the European Economic Area.”

Challenges to Collaborations Between UK and EU on Life Sciences

According to an updated report offered by BioWorld in March of 2020, “The U.K. life sciences sector has stepped into “a new reality” following the publication of the government’s negotiating mandate on the future trading relationship with the EU.”

Chief executive of the Bioindustry Association Steve Bates has spent the last three years lobbying for a mutually beneficial agreement for the life sciences and biotech industries. He says that “Plan A is no longer on the table.” As he sees it, the industry will need to brace and ready itself for additional costs and delays due to increased regulatory processes that will begin at the start of 2021.

Michel Barnier, EU Chief Brexit negotiator, revealed his plans for the future of the EU-UK relationship in a 441-page legal draft circulated to member states back in March. The draft doesn’t directly address the matter of research programs but does lay some groundwork.
The UK government claims it will buy its way into the next big EU research program, Horizon Europe. But this is reliant on negotiations not breaking down in the next few months.

The legal draft seems to be unwavering saying that any deal, “has to respect our red lines of no commitments to follow EU law and no acceptance of the [rulings of] the European Court of Justice. There are very limited options for third-country membership of EU bodies, and we’ve been clear we’ll be operating on the basis of existing precedents.” Further negotiations were halted due to COVID-19 concerns in the Spring but have since reconvened via videoconferencing.

The Future of UK Biotech

As previously stated, the UK’s exit from the European Union impacted British industries, especially pharmaceuticals and biotech. That would explain the lurch in UK biotech investment that happened in 2019. But it isn’t all doom and gloom.

According to a recent report by the UK BioIndustry Association (BIA), there is still much cause for optimism in UK biotech. The BIA report asserts that the UK is the third-largest global bio-cluster, behind Boston and the Bay area and that the industry’s overall growth trajectory is positive, noting that since 2012 investment has increased by over 400%.

As outlined on the PharmaBoardroom website, the BIA report uncovered several key trends from 2019:

  • 2019 was the third-best year to date, with UK biotech companies raising British pound sterling (GBP) 1.3 billion.
  • A GBP of 670 million was raised by venture capitalists, with Initial Public Offerings (IPOs) accounting for 64 million of that.
  • Over 1 billion GBP in investments has been raised in the biotech sector for the fifth consecutive year.
  • In venture capital financing, three UK biotechs managed to raise above GBP 50 million, down from eight such deals in 2018.
  • By way of venture capital financing efforts, UK biotech firms have raised over GBP 50 million and remain a leader in Europe with 26% of the continent’s total.

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