Brexit ‘worry’ for big Irish drug firms

Uncertainty over the future of Britain remaining in the EU has big pharmaceutical manufacturers in Ireland, and around the world, worried.

Brexit ‘worry’ for big Irish drug firms

The market is an important one for pharmaceutical companies located in Ireland. Last year the UK bought €36.4bn worth of pharmaceuticals, €3.5bn of this coming from Ireland.

Of most concern for pharmaceutical manufacturers is disruption to the supply chain to hospitals, pharmacies and sub-supply between their manufacturing plants across the Irish Sea and the English Channel which will inevitably arise if the UK exits.

EU customs’ import formalities will have to be observed even if duties are avoided.

But of bigger concern to big pharma will be the inevitable fragmentation of regulatory controls.

Many in the industry say that the biggest issue facing a potential Brexit is the future of the European Medicines Agency--EMA.

The EMA is responsible for the approval of medicines for all EU countries, including safety monitoring and marketing authorisations.

This results in a single marketing authorisation that is valid in all EU countries, as well as in the European Economic Area (EEA) countries of Iceland, Liechtenstein and Norway - a market of around half a billion patients, worth nearly €235bn.

The EMA is based in London; hence if the UK left the EU its continued location there would be very much in doubt. The head of the Swedish Pharmaceutical Association has expressed his wish for the EMA to be relocated to Sweden if the exit vote wins.

No doubt, the Ibec-affiliated PharmaChemical Ireland, the sector’s representative body here, will also lobby Brussels to have the EMA located in Ireland.

For the Irish medicines regulatory authority —Health Products Regulatory Authority (HPRA) — Brexit will greatly increase its workload whether the EMA comes to Ireland or not, as they must ensure an EU-registered organisation is in place for all imports into Ireland not only of pharmaceuticals, but also of cosmetics.

Most of the cosmetics products sold in Ireland come from the UK under current EU free circulation regulations. But the EU regulation states that a responsible person (RP) should be designated for each cosmetic product placed on the European market.

The RP may be the manufacturer or importer to whose order a cosmetic product is manufactured. Importantly the responsible person must be based within the EU and their address should appear on the cosmetic product packaging.

Sir Andrew Witty, chief executive of GlaxoSmithKline, highlighted the importance of the EMA when, in January, he said pan-European regulation had been “a big win” for drug makers and that “Europe has gone from 27 fragmented, independent, not-talking-to-each-other regulatory authorities in the healthcare space to one.”

Glaxo recently announced a €12m expansion at its Cork plant, where it employs 450 people.

John Lechleiter, the chief executive of Eli Lilly’s operations in the UK, also came out in favour of the ‘Remain’ campaign last year stating that it would be a “shame and a mistake’’ if Britain left the EU, highlighting the employment of many Europeans at the firm’s UK research centre.

Eli Lilly, like GSK, has extensive operations in Ireland.

The link between Ireland and the UK is very pervasive across a very wide range of global pharmaceutical corporations, some with headquarters in Ireland into which the UK plant management report with Irish plant managers reporting into UK headquarters.

It is easy to see why the sector generally is not in favour of a Brexit.

However, the weight of advantage is in Ireland’s favour in the event of an exit.

The Irish plants export seven times more pharma product to the rest of the EU than to the UK.

Managing the associated €23bn of pharmaceutical exports to the EU from a headquarters based in Ireland, with clear regulatory free sales clearance, will undoubtedly appeal more than a head office based in the UK.

John Whelan is a leading consultant on international trade

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