U.K. Leaving EU May Chill Life Sciences Investment

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By John T. Aquino

March 29 — The U.K.'s exit from the European Union would discourage life sciences investors and likely disrupt the forthcoming EU unitary patent system, executives and attorneys said March 29.

The U.K.'s BioIndustry Association (BIA) says that Brexit (Britain leaving), which will be put to a vote in the country in late June, would hurt U.K. life sciences companies.

“Biotech is a global business, so we are international in outlook and scope,” Steve Bates, chief executive officer of the BIA, told Bloomberg BNA in a March 29 e-mail. “At present, the UK is part of the integrated regulated market for pharmaceuticals in Europe which is 27 percent of the global market. We attract a third of the innovation capital in Europe to Britain, and we are the headquarters of choice for many U.S. companies looking to enter the European market,” he said.

Bates added, “If the UK left the EU, then the UK would be an island of 3 percent of the global market for the biomedical industry. By leaving, the UK would lose its powerful voice to influence the regulation of the entire European market and that could put at risk the attractiveness of the UK as a location for inward investment.”

Referendum Scheduled

The Brexit movement was started by the U.K. Independence Party. Supporters of Brexit argue that the U.K. already has opted out of the EU's monetary union, it doesn't share open borders with other European states, the EU's bureaucracy is a drag on the U.K.'s economy and EU laws and regulations threaten British sovereignty.

British Primer Minister David Cameron supported a referendum on whether the U.K. will remain in the EU, which is scheduled for a vote on June 23. But Cameron, saying that compromise he reached with the EU regarding the U.K.'s membership addressed his concerns, now is leading the campaign for the nation to stay in the EU.

According to an online poll from ICM Unlimited for the week of March 16, excluding 16 percent who are undecided, the “remain in the EU” side leads the Brexit side 51 percent to 49 percent.

Life Sciences Speaks Out

A spokeswoman for the U.K.-based biopharma GlaxoSmithKline said in a March 29 e-mail to Bloomberg BNA that the company believes “there are advantages in the UK remaining part of the EU, where the [GSK] Group would continue to have easy access to a significant economic bloc, be able to operate within an established and harmonised regulatory approval system and continue to benefit from EU advocacy on international trade discussions.”

She added, “However, while the UK leaving the EU would create uncertainty and add complexity to a wide range of our business activities, with some short-term disruption likely, we have plans in place to mitigate these effects, and we do not currently believe that there would be a material adverse impact on the Group’s results or financial position.”

“The benefits of an integrated yet competitive environment are clear,” Pascal Soriot, chief executive officer of AstraZeneca UK Ltd., said in an e-mail to Bloomberg News. “We have one single regulatory authority, one process that facilitates sharing data and information across countries and gives approval for a new medicine across the entire European community. This is effective for companies, health systems and ultimately for patients.”

Patent Concerns

Gareth Williams of the London-based law firm Marks & Clerk, which represents U.K. life sciences companies, said in an e-mail to Bloomberg BNA, “As the BIA has said, if the UK votes to leave the EU in June, it is most likely the UK will be excluded from participating in the Unitary Patent and Unified Patent Court system when it comes into force, which will increase costs for companies wanting to obtain patent protection in the UK.”

Many big pharma companies may choose not to use the unitary patent for their most important inventions, at least initially, so the impact for them may be lessened, Williams said. But he added that there inevitably will be a period of uncertainty and doubt over intellectual property protection and enforcement.

“However, it will likely be the smaller pharma companies looking to save on patent costs who will be disadvantaged, particularly because they would be forced to start two separate enforcement actions—one centrally through the Unified Patent Court and another nationally through the UK courts,” Williams said. “Leaving the EU would also move the UK out of the EU trade mark system and the SPC [Supplementary Protection Certificate] system of patent term extension for pharmaceuticals, both of which are EU creations into which the UK has had valuable and influential input.”

Investment Threatened

The BIA began commenting about Brexit in a Feb. 24 letter to the Financial Times newspaper.

“Our industry is a global one where the UK already punches above its weight,” the letter said. It noted that London is home to the European Medicines Agency, the region's regulatory body for drugs, which would likely need to move if the U.K. votes to leave the EU.

“Not only would an exit from the EU negatively impact the life sciences sector, but changing the current arrangement would lead to disruption, expense, and significant regulatory burdens for a new authorization system,” the letter said.

Among those signing the letter were Bates; Soriot; Jane Osbourn, MedImmune Cambridge vice president for R&D BioSuperiors; and Patrick Vallance, GSK's president of pharmaceutical R&D.

Separately, the Chartered Institute for Patent Attorneys noted in a white paper that if Brexit occurs, there also no longer would be a U.K. judge on the Court of Justice for the European Union.

Lost Influence, Opportunity

The BIA made arguments similar to those in its letter in a March 22submission to the Science and Technology Committee of the House of Commons and in Bates' oral testimony before the committee on the same day.

“The opportunities for harmonized medicine across 28 countries is attractive, and you already have to go to the EMA for most of the things that are done in biotechnology,” Bates said in his testimony.

“The biotechnology industry, which is a relatively young industry, has grown up in a European environment,” Bates continued.

In its committee submission, the BIA also noted that as part of the EU the U.K. had been effective in influencing EU regulation that impacts the life sciences sector.

“The MHRA [Medicines and Healthcare Products Regulatory Agency, the U.K.'s regulatory body for drugs] has been able to exploit its reputation, leadership and expertise to positively influence the EU medicines regulatory regime.” If the U.K. were to leave the EU, the BIA wrote, “the UK would be in the paradoxical situation of having a world-leading regulator (the MHRA) that is only able to create regulation for 3 percent of the global market and whose work would be informed by a European framework that it cannot influence.”

—With assistance from Makiko Kitamura in London.

To contact the reporter on this story: John T. Aquino in Washington at jaquino@bna.com

To contact the editor responsible for this story: Randy Kubetin at rkubetin@bna.com

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