Biotech in the age of Brexit
What could leaving the European Union mean for biotech businesses and our bioeconomy?
The UK’s vote to leave the European Union has created major uncertainty for the future of many industry sectors, and biotech is no exception; however, for biotech and the bioeconomy a generally negative picture has hidden several potentially positive changes.
Some of the key areas that could impact greatly on British biotech’s future include:
The European Medicines Agency which evaluates and regulates new medicines for the EU is headquartered in London, but as European institutions are currently required by law to reside in EU member states it seems unlikely that it will remain in the UK in the event of a hard Brexit. Almost all (22 of 28) of the other EU member states have expressed an interest in providing a future site for the agency.
Many pharmaceutical companies cite the presence of the EMA as a reason to site their R&D in the UK, so the EMA may be followed to the Continent by at least some of those companies – a Japanese task force of biopharma companies recently stated that losing the EMA would damage London’s appeal.
However, this damage would only materialise if the UK fails to create an equally compelling reason for those companies to stay. Former Life Sciences minister George Freeman has stated that removing current EU regulations for biotechnology would “easily compensate for the risks” associated with losing EU market access. With mounting anti-biotech and anti-GM sentiment across the EU, a new regulatory framework for biotech could give the UK an advantage in developing new bioproducts.
Funding and finance
As 15% of UK research funding comes from EU funds, losing access to those funds is one of the more visible risks involved in separating from the EU. Despite Government commitments to genuine increases in UK-based R&D funding, the loss of EU funds coupled with weak economic growth could put even more pressure on research councils and institutions.
However, the reduced value of sterling has made exporting a more attractive prospect for all UK-based firms, and has additionally boosted the appeal of inward investment from other countries. One CEO of a Cambridge-based biotech startup said
” For U.S. investors, we just got 20% cheaper. I’ve got U.S. investors sniffing around and we have actually had those conversations. They get 20% more for their money. “
In addition, leaving the EU will also mean the UK is no longer beholden to state aid regulations, meaning industry-specific tax relief or funding schemes for UK companies could be developed.
As bioeconomy industries require a high-skilled workforce for their R&D, the uncertainty caused by the referendum vote is having one of the most immediate negative effects on the UK sectors; a German academics’ body has warned that up to 15% of UK university staff could leave if the Government decides not to grant academic freedom of movement. This effect on the science base could have major ramifications for the UK bioeconomy in the longer term.
In the context of this varied and uncertain picture, the UK Government is defining their new industrial strategy that seems likely to involve direct support for specific industry sectors; in turn, it appears likely that biotech and the bioeconomy are going to appear high on the priority list.
Chairman of the Prime Minister’s Policy Board and former Life Sciences Minister George Freeman recently described Britain as a “trailblazer” for biotech, and called for a “national mission” to bring science and industry closer together.
Along with this endorsement, the bioeconomy has also been prioritised by the Department for Business, Energy and Industrial Strategy; the first industrial strategy call for evidence issued by BEIS related to the bioeconomy.