UK: Article 50 – Gearing Up For Brexit In Life Sciences

Last Updated: 25 April 2017
Article by Ronan Langford and Sara Ulrich

Time to act?

Since the UK voted to leave the European Union (EU), some eight months ago, the ongoing debate has been dominated by uncertainty - with limited guidance on how to plan for changes to come. While there has been limited appetite to act in the context of such uncertainty, the Prime Minister's decision to trigger Article 50 has now set the clock ticking.1

Since the UK's vote to leave the EU, Deloitte have run a series of Brexit Labs to understand the implications of Brexit for the life sciences industry.2 This week's blog highlights some of the insights identified, with some practical steps that could be taken in the coming months.

What do we know?

  • the triggering of Article 50 has brought clarity to the potential timeline to the point of exit by initiating the start of the formal two-year negotiation window; however, it is likely that new trading agreements will require a longer negotiation period
  • the UK Government is continuing to work with the UK EU Life Sciences Steering Group, which it established in July 2016, with an overarching objective to determine how to create a world-leading life sciences environment post-Brexit3
  • the Government's 'Plan for Britain', published in February 2017, outlines 12 negotiating objectives for exiting the EU - including making Britain 'one of the best places in the world for science and innovation'. It recognises the fundamental strength of the UK in this field, and expresses a desire to continue to collaborate with Europe on scientific initiatives4
  • in response to the UK setting out its negotiating position, the European Commission has published – the draft European Council (Art. 50) guidelines – which outlines the EU's negotiating position5
  • Deloitte research suggests that Brexit is a third order priority for many EU countries behind domestic political imperatives and continued EU cohesion.

Why plan now despite uncertainty?

Whilst nobody can predict the outcome of the next two years of negotiations, we can be sure that Brexit will require all organisations to take some big decisions. Some will require lengthy and complicated preparations, and for many, there will be advantages in thinking about this sooner rather than later. The key is to preserve decision-space for as long as possible by planning ahead.

Tackling uncertainty: planning for the maximum change

In order to address the uncertainty, the Deloitte Brexit Labs built and explored multiple scenarios with subject matter experts from across our Life Sciences and Healthcare Industry Team.

Our scenarios focussed on the:

  • exit deal
  • UK Government's strategy in response to the exit deal
  • EU's response to the UK Government's strategy
  • resulting impact on the four freedoms of the EU
  • future EU/ UK life sciences regulatory and commercial landscape.

When considering the exit deal, we used the maximum change scenario – using a World Trade Organisation (WTO) exit model – as the starting point, on the basis that if you prepare for the greatest change, implicitly you will cover less disruptive changes.

Some of the key challenges that will potentially impact life sciences organisations under the WTO exit scenario include:

  • some level of change to the regulatory alignment between the European Medicines Agency (EMA) and the Medicines and Healthcare product Regulatory Agency (MHRA) is inevitable; the maximum change would lead to a separate approvals process and separate labelling for the UK market, and difficulties including the UK as a medical trial destination (especially if the UK can no longer access EU systems)
  • the introduction of WTO tariff rates between the UK and the EU
  • an EU Unitary Patent which does not include the UK, and the end of recognition of EU trade marks within the UK; ending parallel trade, increasing costs for brand owners, and introducing infringement risks
  • the loss of free movement of people, impacting cross-border talent acquisition and collaboration, with a particular concern for life sciences R&D
  • a reduction of UK R&D funding (due to exclusion from EU programmes such as Horizon 2020), and a reduction of EU funding (due to lost UK contributions).

So, what practical steps can organisations take now?

The above are just some of the possible impacts; so, what practical steps can organisations take now without regret? We consider that life sciences organisations need to think and plan now, so that if any of these impacts are realised, they would be able to implement mitigation actions at an accelerated pace. Actions include:

  • analyse the impact of separate approvals processes and labelling for the UK
  • develop assessment criteria that can be used on a case-by-case basis if a separate UK approvals process is required, to make cost-efficient launch decisions
  • analyse the impact of WTO tariffs on trade profitability and R&D efficiency, and conduct locational analysis to check if changes to supply chain would lead to savings (and be ready to implement at point of exit)
  • gather information on the organisations national status of current UK and EU workforce and talent pool
  • model the impact of the loss of the free movement of people
  • understand which existing EU R&D funding will be impacted and the possible consequences
  • strengthen existing relationships and identify new potential collaborators.

We have developed an interactive 'Playbook for Life Sciences' which can be used to customise a number of practical steps that organisations can take now. The fundamental premise underpinning this Playbook is that organisations who undertake more in-depth thinking and planning to uncover specific impacts and to create an actionable, timelined mitigation plan will be better prepared for the new world.


2 The Brexit Lab is a Deloitte construct that accelerates and structures the process of identifying and prioritising the possible impacts of Brexit, and helps participants to develop a flexible contingency plan (a timelined plan detailing the actions to take upon the materialisation of key triggers). It brings together the key people from an organisation contemplating the various scenarios with Deloitte subject matter experts, to drive cross-functional, robust thinking.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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