Brexit and the Pharmaceutical Industry: Introduction
Primary Article Contributors: Roann Enriquez, Jessica Ho, Charlotte Kurs, Samantha Jennings, Thurka Brabaharan, Lyndsay-Marie Talon, Dylan Movassaghi, Mayuran Sivakumaran
Team Leader: Haley Daniel
Keywords: BREXIT, Pharmaceutical, Britain, Economy, Referendum
Political Climate
The most recent election in Britain took place in June 2017 and was called early by Theresa May, the current Prime Minister. This election took place prior to the Brexit referendum, and saw the conservative party losing multiple seats, and parliamentary majority, contrary to expectations. The conservative party narrowly defeated the labour party, but did lose its majority. This was the second election in under two years, and it defied many expectations and predictions. Many are concerned that traditional party loyalties in Britain are breaking down, making British politics more confusing and less easy to predict.
Former Prime Minister, David Cameron stepped down during the backlash of the decision to call for a referendum regarding Britain’s position in the European Union and eventually also resigned from his seat in parliament. Many big figures in British politics have predicted that his successor Theresa May, of the same political party, will likely not be able to hold her position in the next election either.
Jeremy Corbyn and the labour party gathered 40% of the vote in the most recent election, compared to the 42% of the conservative party. It seems likely that Britain will be facing some major political changes in leadership during or before Brexit negotiations, but overall has maintained a stable government throughout the referendum and its immediate backlash.
Stability of the UK
Britain is a relatively stable country. It is a member of many international bodies, including the United Nations. International relations with members of the European Union have declined slightly since the BREXIT vote as government negotiations occur, but countries are expected to maintain their close relationships even after Britain exits the EU.
Non-violent protests are a relatively common occurrence. Recently, on October 14th 2017, a series of rallies took place, with attendees asking that the government remain in the European Union. Brexit is not the only subject on which protests are centered, but is prevalent in political discussion. Most protests are stable exercises of democracy.
Terror attacks have occurred frequently in Britain in recent years, with 4 attacks suffered in 2017, and a history of other occurrences since 2000. Attacks have occurred in a number of cities, with London being targeted most often.
Britain’s recent major developments in politics were puzzling and unforeseen. The outcomes of both recent elections and the referendum was largely unanticipated by citizens, parliament as well as allies of Britain. Voters in Britain are described by experts as becoming increasingly volatile as well as less partisan. These results displayed a lack of stability amongst voters.
The UK Economy
The UK economy has been strong over time, as the country currently boasts the fifth highest GDP in the world at around 2 trillion USD. Although the UK has been a country of innovation and a leader in many industries, it could be said that much of their success has come as a result of being an integrated member of the European Union which is now being disputed.
Historically, the UK has done well at managing their exchange rate and have performed well against the USD over the past 10 years. This being said, since talks of Britain leaving the EU have surfaced, the exchange rate has plummeted and is doing poorly compared to its historical price. The British pound has enabled the country to attract many foreign investments and has also led to many multinational companies choosing to place their headquarters in cities such as London. However, with the prospect of Brexit many big corporations have threatened to relocate their head offices to mitigate potential losses that may occur if Britain does decide to leave.
Since the referendum decision in June 2016, the UK has taken a massive hit, and the economy is in a steady decline. Experts have predicted that the total growth expected in 2018 will be around 1% which is a stark difference from the past 12 years.
The Pharmaceutical Industry
The pharmaceutical industry in the UK is predicted to grow from $28.8 billion in 2015 to $43 billion in 2020. The industry makes up 10% of their GDP, generating over $3.5 billion. It is the 6th largest contributor to the UK’s balance of trade and contributed $46.9 billion to the economy in 2014. BREXIT may cause the pharmaceutical industry in the UK to decline; the regulatory processes and market authorization of drugs, currently regulated by the Medicines and Healthcare Products Regulatory Agency (MHRA), may be disrupted.
GlaxoSmithKline (GSK) and Astrazeneca are the largest pharmaceutical companies based in the UK, with $88 billion and $68 billion in market value respectively. They would be most affected by BREXIT, claiming that BREXIT will harm their ability to gain early access initiatives in developing, testing and manufacturing new drugs. Executives within both companies created a letter that supported the UK remaining in the EU.
UK pharmaceuticals are a major export for the European Union (EU), remaining the largest single export market for UK pharmaceutical companies. Its exports to the EU have grown by around 30% over the last 10 years, with Germany being a crucial market due to its large and wealthy, yet rapidly ageing population. Brexit could imply the implementation of tighter border restrictions, new tariffs, a new costly regulatory overhead. In actuality, however, the EU currently represents less than half of total UK pharmaceutical exports. Exports to outside the EU have more than doubled over the last ten years, with some of its main growth markets being Asia (specifically China) and the US.
Britain has had a relatively stable history, but there is increasing uncertainty as to how Brexit will impact the nation. In the following articles, we will be analyzing the effect that Brexit could have on the pharmaceutical industry in Britain, potential political risks, and mitigation strategies.
