Posted on about 2 years ago by Gerry Kennedy
As U.K. voters head to the polls on Thursday for the EU referendum, uncertainty for life sciences looms large. FierceBiotech talks to biotech execs, regulators and trade groups to assess the mood ahead of Thursday’s vote.
The road to a referendum has been a relatively short one; official campaigning to remain in the EU or leave the Union began back in February. Just 5 months later, and it’s nearly upon the British public as polls open Thursday morning. But concerns over whether the U.K. should remain a part of the European Union--or restrict its role or even leave entirely--are not new.
The question over whether the U.K. should stay in Europe has in fact been asked before--back in 1975, just a few years after it joined, where voters said 2:1 that yes, the U.K. should remain.
But a lot has changed in the 41 years since, with integration into the Union now much deeper, a single currency across most member states, and more countries than ever before in the EU.
For some, the Union has gone too far, with many on the right of British politics arguing that European law is eroding British sovereignty, increasing demands on services due to increased immigration from the EU, and restricting trade pacts with other countries. Those on the left tend to argue that the U.K. holds a special place in the EU, as it did not sign up to the Euro and is able to gain a rebate back on some of the money it pays into the Union, and that overall, integration is a good thing for the economy.
For the last 5 months, both campaigns for remain or leave have become increasingly bitter, with both sides accusing the other of misinformation and scare-mongering. The polls have remained fairly split (with a large percentage still being undecided)--although in the run-up to the vote in early June, the leave campaign seemed to have taken a lead in the opinion polls.
This however did not last after the tragic murder last week from a lone attacker of the Labour MP and remain supporter Jo Cox, which saw a pause in campaigning, and a swing back to leave.
There are many issues at hand, but the main complaint coming from voters has been the lack of facts about what the post-Brexit landscape would look like. The main issues for the electorate as a whole remains macroeconomics and immigration--but just what the economy and the level of immigration will be both long and short term should U.K. remain or leave has been the subject of much speculation, with varying views and figures being bandied about.
So, what does this all mean for life sciences? The pharma, biotech and healthcare industries are not high-level concerns among those heading to the polls on Thursday; but the U.K.’s state-run National Health Service (NHS) is, and inextricably linked to this are these industries. Pharma, biotech and med tech are major industries and growth drivers in the U.K. and in recent weeks, questions over what will happen to them, and the bodies that govern them, have been brought into the public debate.
But days before a decision will be made, just what the life sciences industry would look like should the U.K. leave is still as vague as it was back in February--with no firm contingency plans from the government or regulators in place if the country decides to break its union with Europe.
The BIA, which represents the biotech industry in the U.K., has been very clear: Speaking toFierceBiotech back in February when political campaigning formally began, its CEO Steve Bates said that as a small island the U.K. makes up just 3% of the global market for the biomedical industry--compared with 27% for the EU as a whole, which the U.K. is currently integrated within.
But if the U.K. decides to leave on Thursday, the country would the BIA contends become a smaller fish in an enormous pond.
Speaking to FierceBiotech this week, Bates said his group had written up its own contingency plans, while both publically and behind the scenes campaigning for remain, and extoling the virtues of the EU for the biotech industry.
“We have plans in place for whatever happens on Friday morning,” Bates tells me. “But it’s not an easy task. I’d say we’ve done some of thinking around what can happen and how we could react. Now, it looks very straightforward: There can only be one of two outcomes come Friday. But of course it’s what happens after that decision that is the unknown, and really it’s at this time pure speculation as to what will happen.
“But here’s what we have. If we remain in the EU and take on reforms of the Union as a whole, as well as slowing down the U.K.’s rate of integration, we’ve got to know how the sector will work within that. We also, of course, will see the prime minister of the U.K. become the president of the EU next year [this is given to the leader of a member state on a rolling basis] and there are some things we’d like to put on the agenda for life sciences during that period.
“That’s the 'in' scenario. If the U.K. votes 'out,' well frankly we don’t know what the full implications of that decision will be. We know what we’re worried about, which is how the European medicines regulatory structure will work if we’re not a part of the EU; what this will mean for the unified patent initiative, which is run on a European basis; and what will happen to the flow of investment.
“But much of this depends on something that both campaigns have provided no clarity on: We don’t know what type of “out” the U.K. might be faced with, so for us it’s very hard to do any detailed planning if you don’t know what type of scenario you’re facing. What we are clear about, however, is that there will be a period of uncertainty.”
Biotech CEOs in the U.K. are also concerned, with many signing an open remain letter this year to ensure that the U.K. does not split.
Just this week, U.K.-based antifungal biotech F2G Ltd gained an impressive $60 million in a VC raise, with much of the pot coming from Novo Nordisk ($NVO) and Novartis ($NVS), as well as other investment firms.
Speaking to FierceBiotech, Ian Nicholson, CEO of F2G, echoed a similar sentiment to many heads of U.K. biotech. He told me: “F2G has benefitted from harmonised regulatory incentives in the EU (we have been accepted into the EMA’s adaptive licensing pathway as an example); we have been the beneficiary of EU FP7 funding and approximately 25% of our highly skilled staff (both scientific and our CFO) are from other EU countries; and we rely on current freedom of movement for these individuals.
“We are firmly in favor of remaining in the EU as we believe the benefits (which F2G utilizes) are very significant for all life science companies.”
One of the bigger concerns, as both Bates and Nicholson touch upon, is that of medicines regulation. The European Medicines Agency (EMA) is based in London and is responsible for the central marketing of medicines in the European Union and those in the European Economic Area (EEA), such as Norway, Liechtenstein, and Iceland.
Should the U.K. leave the EU and not remain a member of the EEA (and perhaps even if it did), the EMA would likely leave its current HQ in London, and would also likely not be the central marketing authority for drugs in the U.K.--although again, a lot depends on what kinds of post-Brexit deals are struck.
The EMA has been around for two decades and has largely taken over from European countries’ individual medicines regulators, although they do still exist and can authorize medicines in their own regions. The MHRA, the U.K.’s main drug regulator, has over the years taken on greater responsibility, and currently undertakes around a third of the EMA’s regulatory work. The U.K. is also often a first or early launch country once a company gains EMA approval; something many in the industry say will inevitably be lost if we leave.
The attractiveness of the EMA is that it has become much easier and more efficient for life science companies to seek a central EU/EEA approval, so it can launch across all countries and not go from region to region seeking approval. This is of course still an option for some, but most now choose the EMA as the central authorizing body. It’s also in recent years enacted new policies to try and speed up its review process and help companies with their applications.
Denmark and Sweden are according to press rumors vying with each other to become the Agency’s home in the event of Brexit, given the apparent prestige and opportunities it brings to its country of residence. In the case of the U.K., the regulatory landscape would likely change significantly if it left--but just how and what shape it would take remains vague.
Neither the EMA nor the MHRA would talk directly to FierceBiotech about the vote and its consequences, with the EMA saying that the referendum and the related campaigns “are a matter for the British government and the British people.”
It went on: “There is no point for EMA as a European agency located in the U.K. to speculate on the result of the referendum and its potential consequences on the U.K., the EU as a whole, or the agencies.”
But it added that the political debate within the U.K. “will not deter EMA and the European medicines regulatory network from their mission to ensure that patients and animals in Europe have access to medicines that are safe, effective and of good quality, and that patients, healthcare professionals and citizens are provided with adequate information about medicines.”
The European Commission was even more brief. When I asked what the U.K. regulation of medicines would look like in a post-Brexit world, Tim McPhie, the EC’s press officer it said: “The Commission does not speculate on hypothetical scenarios.”
Neither have publically posted any contingency plans, but both would tell you behind closed doors they want the U.K. to remain. Bates tells me that he has spoken to the EMA about this, and personally to Guido Rasi--the head of the Agency--who said a Brexit was nothing short of a “nightmare with immediate consequences.”
Bates said he doesn’t blame the EMA, the MHRA and the EC for not posting their own contingency plans in case of a Brexit, simply because there are so many variables that you just end up speculating: “You can’t base concrete policy on speculation,” Bates says.
So what will happen? Bates explains: “Many things about the U.K. life sciences sector will not change on Friday. The sector will still be strong; management will still be excellent. The rule of law in the U.K. will continue to exist, as will the Queen. This will not create a new epoch. But, there will be specific uncertainties in specific areas that are highly complex.”
Should the U.K. leave, it would have to wait at least two years before doing so under current rules. It is during this time that new deals, and the post-Brexit world--should it vote to leave--will be created. Bates said that this is the time when the BIA and others in the life sciences will be in the room with MPs and regulators to try and shape the best possible deal for the sector.
But for now, many in the U.K. biotech community will be holding their breath ahead of the vote this Thursday.
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