Today Sir Tim Barrow, the British ambassador to the European Union, handed a letter signed by Prime Minister Theresa May to Donald Tusk, the European Council president, triggering article 50 and sparking at least two years of uncertainty for the UK’s healthcare and life science industries.
Since the public vote on June 23 last year to end formal links with the EU few details have emerged on the shape of Brexit Britain. What is becoming clearer, however, is the sheer enormity of the task of renegotiating not only trade agreements, but the laws surrounding regulatory processes and finance.
In a draft statement responding to the Article 50 notification, which has started the UK's formal exit process, the remaining EU27 countries said that the focus would be on an “orderly withdrawal” with the priority to minimise the uncertainty caused by Brexit.
Rules of disengagement
However, it appears that the EU is also prepared to draw several lines in the sand that will make the process of leaving tougher than many had hoped. Chief among the EU’s draft guidelines leaked to the UK’s Guardian newspaper is an insistence that the UK should not try to negotiate free-trade deals with other countries while it is still a member of the European Union, scuppering hopes of a trade deal with the US on day one of Brexit.
The EU does hold out some hope, outlining the possibility of transitional deals extending beyond 2019 to ensure that any important outstanding issues such as custom controls and trade barriers would not be enforced on day one of Brexit. However, it does not want this breathing space to extend beyond three years.
An extension for some of the trickier elements of the negotiations could help ease one of the biggest issues facing the UK healthcare sector – drug and medical device regulation. Some believe that the UK will struggle to have its own standalone regulatory body in place in time, to replace current CHMP and EU functions.
“Early agreement on key issues like the regulation of medicines, the regime to enable non-UK nationals to work and contribute to the UK life science ecosystem, trade, finance support, market and intellectual property rules, would be the best way to ensure speedy and continuing global inward investment into the UK and EU,” said Steve Bates, chief executive of BIA, the UK's biotech trade organisation, in a statement today.
But with so many matters to negotiate, including the fate of the three million EU nationals currently living in the UK and an all-important trade deal, few believe that any resolution for drug regulation will be speedy. Financial support for the sector also remains a concern.
One of the possible impacts on early-stage funding could be the loss of money from the European Investment Fund (EIF) into healthcare venture funds. Between 2011 and 2015 the EIF placed €2.3bn ($2.5bn) into 144 UK-based venture funds, accounting for roughly 37% of all venture funding in the UK, according to Invest Europe.
While not all of this money would have been allocated to healthcare funds, the sheer sums involved show the importance of European funding for the sector. UK-based venture capital firms who have previously benefited from EIF money include Abingworth, Advent Venture Parnters, MVM Life Science Partners, IP Group and UCL’s Technology Fund. Some UK-based venture capital firms are reportedly looking for European offices to ensure that they continue to have access to the funds available through the EIF.
While a letter might have started the process to withdraw the UK from the EU, many more words and the passage of several years will be needed ultimately to determine the future of the UK's life science industries.
For a more in-depth look at the potential impact on the healthcare sector please see our previously published Brexit report.