The UK government unveiled its Industry Strategy this week to outline its long-term economic plan as it continues with negotiations to exit the European Union. So what is the impact on business overall and the pharmaceutical industry?

The strategy highlights certain policies, including those to encourage partnerships with key industries, such as the life-sciences industry. Although favorable, the pharmaceutical industry is emphasizing the need for better clarity in the Brexit negotiations between the UK and the European Union.

Inside the UK’s Industrial Strategy

The UK government issued its Industrial Strategy that sets out a long-term plan for the UK economy in light of the UK’s decision to exit the European Union (EU) (Brexit). It highlights five pillars to its economic vision for the UK: (1) ideas: the world’s most innovative economy; (2) people: good jobs and greater earning power for all (3) infrastructure: a major upgrade to the UK’s infrastructure; (4) business environment: the best place to start and grow a business; and (5) places: prosperous communities across the UK.

“As we leave the European Union and forge a new path for ourselves, so we will build a Britain fit for the future and fulfill the mission that I set on my first day as Prime Minister: to make our United Kingdom a country that truly works for everyone,” said UK Prime Minister Theresa May in announcing the Industrial Strategy.

In support of its five pillars, the UK outlined several key policies in its Industry Strategy, with two pillars of particular importance to the business community. Key policy moves as part of its “ideas” pillar include: (1) raising total research and development (R&D) investment to 2.4% of gross domestic product by 2027; (2) increasing the rate of the R&D tax credit to 12%; (3) investing £725 million ($971 million) in new the Industrial Strategy Challenge Fund programs to capture the value of innovation.

With regard to the “business environment” pillar, the UK government outlined several key policy moves. These include advancing what it calls launch- and roll-out sector deals, which are partnerships between government and industry aiming to increase sector productivity. The first sector deals are in the life sciences, construction, artificial intelligence, and the automotive sector. The UK government also will seek to drive more than £20 billion ($27 billion) of investment in innovative and high potential businesses, including through establishing a new £2.5-billion ($3.3-billion) investment fund, incubated in the British Business Bank. The government also is launching a review of the actions that could be most effective in improving the productivity and growth of small and medium-sized businesses, including how to address what has been called the ‘long tail’ of lower-productivity firms.

Pharmaceutical industry reaction.

Following the release of the UK Industry Strategy this week in late November 2017, nine associations representing the European and British pharmaceutical, biotechnology, and over-the-counter medicines industries, issued a joint statement to underline the importance of securing cooperation between the UK and EU on medicines regulation. Offering feedback were: the European Federation of Pharmaceutical Industries and Associations (EFPIA), which represents European innovator, research companies and national pharmaceutical associations in Europe; Medicines for Europe, which represents generic-drug manufacturers in Europe; EuropaBio, which represents European biotechnology companies; the European Confederation of Pharmaceutical Entrepreneurs (EUCOPE), which represents small-to-medium-sized innovator pharmaceutical companies; the Association of the European Self-Medication Industry (AESGP), which represents manufacturers of non-prescription or OTC medicines in Europe; the Association of the British Pharmaceutical Industry (ABPI), which represents pharmaceutical manufacturers in the UK; the British Generic Manufacturers Association (BGMA), which represents generic-drug companies and suppliers in the UK; the UK BioIndustry Association (BIA), which represents biotechnology companies in the UK; and Proprietary Association of Great Britain (PAGB), which represents OTC manufacturers in the UK. 

“Whilst we respect the phased approach of negotiations, we urge progress to be made in the negotiations as soon as possible,” said the associations in a November 28, 2017 joint statement. “We urge Brexit negotiators on both sides to agree on a transition period that adequately reflects the time needed by companies, as well as all relevant authorities at EU and national level, to adapt to changes in view of the UK exiting the EU. The transition period should provide for continued EU-UK partnership on the regulation and supply of medicines to avoid supply disruption while moving forward towards a future cooperation agreement between the EU and the UK.”

The associations noted the particular challenges that the pharmaceutical industry faces under Brexit and the need for UK and EU authorities to address those issues. “For our sector Brexit represents a challenge in several areas, notably regulatory procedures, quality testing of medicines, supply chain, trade, and intellectual property,” the associations said in their joint statement. “For example, medicines companies may need to submit applications for the transfer of marketing authorization for many products, move batch-release sites and duplicate quality testing for products or move personnel into either jurisdiction. This will take a significant amount of time and will result in capacity issues which cannot be resolved before March 2019.”

To this end, the pharmaceutical industry is seeking clarity for the UK-EU negotiations as they relate to the supply of medicines in Europe. “Clarity and certainty are needed as early as possible to enable our industry to make the necessary changes and to transition smoothly into the new framework,” said the associations in the joint statement. “This is key to ensure that there is no disruption in the supply of medicines for patients after March 2019. Even in the context of the Brexit negotiations where all sectors are looking for clarity on the future, it’s important to recognize that medicines are different. Our goal is ensuring that patients across Europe and the UK are able to continue to access safe and effective medicines through Brexit and beyond, and to ensure that there is no adverse impact on public health. This goal should be front of mind for both the EU and UK negotiating teams.”