On May 17, the Business, Energy and Industrial Strategy Committee (BEIS) released a report detailing the consequences of the U.K. leaving the EU without a deal for the pharmaceutical industry—one of the most dynamic in the U.K. GlobalData estimates that in 2017, U.K.-headquartered companies generated a total of $87.5B (£64.9B) in global sales, of which approximately 80 percent was accounted for by GlaxoSmithKline and AstraZeneca.

A small reduction in the size of the sector could therefore have significant effects on the U.K. economy. Findings in the BEIS report suggest that if the U.K. fails to reach an agreement with the EU for the industry during Brexit negotiations, there is a risk of the U.K. becoming a second-tier state in pharmaceuticals.

Source: GlobalData

Figure ($M) represents 2017 global sales


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The U.K.’s future role in the European Medicines Agency (EMA), which offers the convenience of a centralized regulatory pathway across the EU, is expected to significantly impact the U.K.’s pharmaceutical sector post-Brexit. If the U.K. government does not negotiate regulatory parity with the European Economic Area (EEA), the U.K. will no longer have access to the single marketing authorization for EU and EEA countries, requiring companies to submit a separate UK application for any new drug.

This would require duplication of staff and facilities in order to conduct clinical trials and submit regulatory applications in both the U.K. and the EU, costing pharmaceutical companies millions upon millions of dollars. The BEIS warns these consequences will make the U.K. an unattractive small market and result in complete loss of access to certain drugs, particularly specialized therapies.

The U.K. remaining in the EMA is not only of benefit to the U.K., but also to the EU. As home to four of the world’s top six research universities (Cambridge, Imperial College, Oxford, and University College London) and pharmaceutical headquarters, including GSK, the U.K. is a life sciences leader in regards to both academic research and pharmaceutical development. If the U.K. diverges from the EMA, the EU risks losing a talent pool of experienced pharmaceutical executives and the next generation of scientists. Amongst substantial uncertainty around the U.K.’s position in the pharmaceutical industry post-Brexit, the BEIS calls on the U.K. government to prioritize negotiations with the EU to reach a deal for the industry. If not, GlobalData anticipates the U.K. risks not only losing its status as a leader in drug discovery and development, but also in providing patients with the best possible care post-Brexit.