The announcement of a draft transition period during the March EU summit represented a positive step forward for opening up the discussions around trade that will determine the future relationship of the UK with the EU. However, there remain some significant issues that require substantial progress ahead of the next EU summit, in June. Of paramount importance, is the future of the Irish Border and the UK’s future customs relationship with the EU. The UK government maintains the position that the UK will leave the customs union despite a vote from the House of Lords instructing them to reconsider whilst EU negotiators demand that the UK resolves the apparent contradiction of exiting the customs union whilst maintaining a frictionless border between Northern Ireland and the Republic of Ireland.
Suffice to say, there remain some significant uncertainties impacting the UK’s journey out of the EU. However, both sides are hoping to honour the transition period that was agreed in March. As such, there is some clarity which will support companies in planning for their future and to consider how best to shape their businesses in the new post-Brexit world. This blog considers immediate and future looking priorities for the Pharmaceutical and Life sciences sector...
The implication of the transition period is that, if ratified in November, the status quo will be maintained until December 2020. That means there is no change in critical areas of focus such as border processes, movement of people and regulation during the transition period. Specifically:
Furthermore, continued operation as an de facto EU member will mean that UK companies will have been working with or towards new regulations such as the Medical Device Regulations (MDR) and General Data Protection Regulations (GDPR) for 21 months longer, thus decreasing the likelihood of rapid divergence for UK industry from EU standards.
However, the MHRA will not experience the same status quo as their inclusion in the EMA will be reduced to an observer role until the future relationship is determined. The EMA has already begun redistributing the rapporteurships and co-rapporteurships, for new centralised MAs, held by the UK to the remaining EU 27 countries.
Agreement around transition, however, is not indicative of the final Brexit settlement, which is now the focus of negotiations with substantial progress expected by June and key decisions expected in to be ratified following the October summit. The government is clear that the UK will leave the single market and customs union, although this will now be in December 2020 rather than March 2019. Our head of Brexit, Andrew Gray, recently shared his views on scenario insights that clients can be using for scenario planning now.
Companies should use this critical transition time to carry out full strategic reviews of their operations and scenario planning on the following bases:
The Prime Minister has indicated that the pharma and life sciences sector is of strategic importance for the UK and the recently announced UK Life Sciences Industrial Strategy and Industry Sector Deal has demonstrated and detailed substantial investment for the sector.
How might the markets of the UK, EU and rest of the world change over the coming years, with Brexit being a contributing factor, and how would that play into decisions in areas such as product strategy, operating model, acquisition strategy, R&D strategy and geographical market focus?
The UK remains an attractive location for the pharma and life sciences sector and the opportunity to do business in a post-Brexit economy is vast. The key to success will be preparedness and ensuring your organisation is exploiting the opportunities of the new environment.
If you would like more information or to speak to one of our Brexit specialists please do get in touch.