The UK is on schedule to leave the EU in March 2019. Political negotiations relating to the separation have so far been slow and inconclusive, and this has negatively impacted UK business in general and the exchange rate of the UK pound specifically. The UK animal health commercial research organization (CRO) industry is not immune from this uncertainty. CROs provide a service (in vivo animal studies), not a product, and it is unclear what impact a UK outside the EU will have on business conducted within and outside the UK.
Already, this uncertainty has highlighted diverging opinions on whether Brexit may have positive or negative impacts. Recently, Moredun’s Julie Fitzpatrick stated that Brexit poses animal health research threats to the UK, while some members of the National Office of Animal Health (NOAH) have shown signs of optimism.
Regulatory uncertainty
The sustainability of English labelling of products within the EU regulatory system is one consideration of Brexit, raised by the Republic of Ireland’s veterinary medicine sector. English is the EU language in the veterinary pharmaceutical sector – reports, applications and summaries are written in English. Post-Brexit, Ireland would be the only English-speaking country within the EU; will pharmaceutical labelling continue to be translated into English?
The announcement that Amsterdam will host the European Medicines Agency (EMA) after Brexit, while offering some clarity, does not give certainty on how the minimum two-year transition period would operate in relation to the veterinary pharmaceuticals/biologicals, let alone after the transition period expires. The UK Veterinary Medicines Directorate regulator offers updated advice on its website along with key information days, but this is limited due to lack of clarity so far in Brexit negotiations. Similarly, the EMA has offered practical guidance to help pharmaceutical companies developing veterinary medicines prepare for the UK’s withdrawal from the EU.
The Association of the British Pharmaceutical Industry (ABPI), at the Brexit summit of NOAH, tabled a proposed goal for the UK life sciences industry – the aligning of a common regulatory framework with Europe. This should ensure timely access to innovative new medicines and prevent duplicative regulation, which can cause delays, divergence and issues of product retesting and re-release. Furthermore, ABPI revealed that pharmaceutical companies across Europe support an implementation period beyond the two years of Article 50 negotiations, since adequate time is required to ensure relevant customs and regulatory procedures are in place and pharmaceutical companies are able to transition to a defined new framework in force.
Research and resources
ABPI highlighted the need to agree on a straightforward immigration system to allow pharmaceutical companies to employ the best talent so to offer certainty to EU and UK pharmaceutical industry workers. With such uncertainty prevailing, it was surprising and encouraging to read the announcement from MSD to set up a new UK Discovery Centre in London. This seems to demonstrate the commitment of the UK government to encourage investment in life science innovation post-Brexit. The UK government has committed to increasing research and development to 2.4% of gross domestic product by 2027.
It is pertinent to note that the UK and its regulatory systems have an international reputation as leaders in the ‘3Rs’ specifically, and welfare generally. At present, there is an even playing field across Europe on animal welfare standards under Directive 2010/63/EU. In the event of either the EU or UK having different standards in future, there would be a potential economic advantage associated with any decrease in welfare requirements, albeit that any CRO may choose a standard above the legal minimum.
What do CROs think?
UK, EU, USA and Australian-based CROs and consultancies were invited to answer survey questions on how they envisage Brexit impacting present and future investment opportunities in the UK. Each was offered, in confidence, specific questions to address. A majority of non-UK EU CROs found themselves unable to answer the questions as they find the Brexit developments complex and confusing. UK CROs that responded perceived future negative impacts, including a reduction in the number of animal studies they are likely to win compared to EU-based CROs. While acknowledging that the recent negative exchange rate of the UK pound compared to the Euro potentially offers a short term competitive advantage, this is not going to be sufficient to negate future commercial uncertainties.
Only one respondent – a Germany-based CRO – indicated that the actual Brexit process is likely to negatively influence their decision to commission animal studies in the UK. All respondents believed that Brexit should not negatively influence how regulatory dossiers developed in the UK and/or containing reports of animal studies conducted in the UK, are handled by the EMA. One German and one UK-based CRO indicated that Brexit will negatively influence their future decisions to invest in the UK. While this survey was not established to offer any statistical strength in relation to the number of CROs approached and those that responded, it does offer an insight into the precautionary and defensive positions of CROs at present. It is clear the political and regulatory uncertainty is driving a defensive position of CROs relating to the UK animal health industry.
