'Brexit' risks serious side effects for U.K. life sciences

By Ben Adams

As the U.K. prepares to vote this summer in a major referendum on whether it should stay in the European Union or leave it forever, the British biotech industry is imploring voters and the government to stay the course in Europe.

There are myriad concerns from the industry about what this would do to their businesses, and with ongoing economic headwinds across the world--and a biotech funding environment that is delicate to say the least--the possibility of a British exit (or "Brexit") is also coming at the wrong time for the life sciences industry.

At the weekend these worries found a voice as 50 leaders of the biopharma industry in the U.K. and Europe signed a letter in the Financial Times warning against the U.K. leaving the European Union, adding that the U.K.'s membership of the EU "offers various advantages to the life sciences sector."

The signatories warned: "Not only would an exit from the EU negatively impact on the life sciences sector … but would pose significant risks to the U.K.'s attractiveness for inward investment and as a location for the world-leading talent the life sciences sector depends upon."

BIA CEO Steve Bates

The top signatory was from Steve Bates, CEO of the U.K.'s biotech trade group the BioIndustry Association (BIA). Some businesses in the U.K.--notably the big players in the retail industry--have so far not publicly backed remaining in the U.K.--but the biotech industry is not keen to follow its shyness on the topic.

Speaking to FierceBiotech, Bates said: "We are very keen that the U.K. and our life sciences industry stay within the EU, and we are being explicit about this--hence why we have the signed the letter to the FT this weekend.

"One of our biggest concerns is what a Brexit would do for medicines regulation in the U.K. Currently, the U.K. is a loud voice in the regulatory environment in the EU, and we are lucky to house the European Medicines Agency in London. If we left the EU, this would mean we would not have a voice in that arena."

And it gets worse. Bates points out that the EMA is an institution of the EU, and European institutions can only be housed in an EU member state. If the U.K. left the EU, the EMA would have to leave London. What the regulatory environment would then be for the U.K. medicines post-Brexit is at best unclear.

Bates said there are a number of possibilities if this happens: "The U.K. might decide to follow EU rules, which would be OK in the short term, but then obviously we would not have any say in the development of future rules. If we became like Norway [a non-EU member], then we'd end up following the rules, paying in large amounts of money, but not having the chance to make any changes to the rules."

Bates said it could also mean that a whole new set of regulations just for the U.K. would have to be created when it comes to approving new drugs, warning that this could cause delays, added layers of bureaucracy, risk the U.K. being a first-launch market, disruption, higher costs, and cause general confusion and uncertainty for the industry, patients and the NHS.

"Removing the risk of this is simply why we're advocating to remain," Bates explained, adding that he is "acutely aware" that the U.K. is just 3% of the total pharmaceuticals market, and needs open access to a single market to remain competitive.

"The BIA believes that the U.K. is the most attractive destination in Europe for life science companies as we attract a third of the innovation capital to Britain and we are the HQ of choice for many U.S. companies looking to enter the European market--something made possible by having access to a single market," he said. "If we left, I think the U.K. could remain strong, but the 'magic elixir' we have would lose one of its main ingredients of success."

Bates does not believe that the EU is perfect, and is keen for greater reforms to be made.

"We need to ensure that venture capital can flow easily to life sciences and that there is the right market for life science products and technologies," he said. "We have our frustrations with Europe just as we do the U.S.--but in order to get the best out of Europe, we need to be in it, not outside of it."

Are there any positives to Brexit?

"To paraphrase the argument from the 'outers', there is a vision that having full sovereignty restored to the U.K. will enable the country to be more pro-science than it is now," Bates said. "This is an amiable aspiration, but it simply isn't one grounded in reality. We work in a global environment so we need to be international in outlook and scope. If we left the EU, we'd be an island of 3% with its own rules compared to a global, integrated market which we'd have a much smaller voice in."

Bates said the BIA will be talking to all politicians of "all colors and stripes" in the coming months in order to make sure the life sciences industry is heard on these issues. He won't make a call on which way the vote will go, but it coming with contingency plans and guidelines for his members should the out vote prevail this year.

The referendum: key points

An in or out vote for the U.K. to leave the European Union, of which it has been a member since 1969, is set for June 23. British Prime Minister David Cameron is pushing for the U.K. to remain a member, and in February secured a series of reforms with the EU to appease those voters who are on the fence as to whether the U.K. should remain in the Union.

This will be the second time the country has voted in a referendum on the question of staying in Europe: The first time was in 1975, where the vote to remain won with a clear majority.

The issue for a large segment of the population today is having tighter control on immigration, but a recent poll by the BBC suggests that most of the electorate will vote either yes or no in the summer depending on how this decision would impact the economy.

The U.K. is the 5th largest economy in the world (in terms of GDP), but camps are split on whether the U.K. can go it alone with free trade deals as a nonmember of the EU, with some businesses also questioning the practical implications of their residency and working rights for staff in a non-EU country, should it vote to leave.

Big business in general--with only a few exceptions--tends to be in favor of Britain staying in the EU because it makes it easier for them to move money, people and products around the world.

In general, there remains much uncertainty over what leaving would mean for the country, and what type of exit deal could be reached. Current rules however do state that should the U.K. vote to leave, it would have to wait a minimum of two years from June 24 (or when the results are known) until it could do so.

The other issue is the devolved nations (Wales, Northern Ireland and Scotland) and how they will vote compared to England. If the sway of votes from England carries the entire U.K. into leaving the Union against the wishes of the three other countries, this could cause serious political problems. The First Minister for Scotland Nicola Sturgeon, who helped lead the ultimately failed attempt to secede from the U.K. in 2014, said in February that an out vote in the summer would likely force a second referendum for Scottish independence, as it wants to remain in the E.U.

Current research suggests younger people are more likely to vote to remain in the EU, while older voters tend to favor out (and are more likely to vote). The "don't knows" are also running at between 17% and 20%--although most pollsters agree that the vote to stay in or leave is currently very close.

- read the letter in the FT
- take a look at the current U.K. government polls

-- Ben Adams (email)