The United Kingdom (UK) held a referendum on June 23rd to decide whether it should stay or leave the European Union (EU). While the majority voted to leave, most of the political forces, including ‘Remain’ supporters with Conservative and Labour Brexit supporters, will work on a negotiated solution before the final exit.
In fact, nothing will happen immediately. Cameron, or his successor, still need to invoke an agreement called Article 50 of the Lisbon Treaty before setting in motion the formal legal process of withdrawing. This will give the United Kingdom at least two years to prepare and negotiate its withdrawal.
Although it is still impossible to know the exact implications of Brexit on medical technologies, we can consider a likely scenario and its general consequences. This article describes the perspective of ValueConnected for the next years following the Brexit vote and how medical technology companies can prepare.
The upcoming application of EU Clinical Trials Regulation (No 536/2014) is expected to create a single application for clinical trials across the EU and modernize the current framework with a wider level of harmonization. This should significantly reduce administrative burdens on applicants with a simplified process for all EU countries.
With the UK leaving the EU, the country might require a separate trial application process, which is likely to generate extra costs, bureaucracy and damage the UK’s medical technology market. The consequences would be direct and immediate; thus UK authorities are expected to work on a solution to minimize the extra burden on clinical trials for medical companies.
Therefore, the UK should try to maintain a certain level of harmonization with the EU regulations, minimizing the EUs’ extra efforts to enter their local market. Nonetheless, there will likely be extra work for medical companies targeting both the EU and UK.
UK companies might experience higher costs and lengthier processes to sell their products in Europe now. The exit from the EU is likely to create economic instability, restrict the UK market and reduce investment and jobs in the sector.
While a weaker pound can help exports from the UK, the opposite effect will occur for the import of goods and materials. Therefore, the currency ratio is expected to create hardly any impact.
The UK will no longer be a potential entry door to Europe. International medical companies will have to decide to invest in a larger EU market, or to focus on a localized UK opportunity, and live with the cost restrictions from the NHS.
Does this mean the UK could lose its business appeal for medical technology companies? Most probably not. With the exit from the EU, we expect UK authorities to sign agreements within the EU, although there will be a significant level of skepticism, and other markets. Who knows, maybe India?
Companies should be closely watching the progress of such agreements within the next months. For the UK, it is imperative to communicate the idea that their market for medical technology stretches far beyond just the UK.
Medical innovation and research
UK universities rely on EU funding for around 16% of their total research budgets. While being outside the EU does not necessarily block involvement in research programs, we can consider the example of non-member countries, such as Switzerland and Norway, who have paid to participate in several funding initiatives only to find themselves ‘deprioritized’ when it came to gaining access to major European scientific facilities.
While many argue that this shortfall in research funding could be made up from the UK’s EU budget payments, many believe that this money would be swallowed up in the costs of ‘Brexiting’.
As an international company and team, we are sad to see the United Kingdom leave the European Union in a time where unity is highly necessary. However, it is very likely that the new status for the UK will be similar to Switzerland and Norway, with the EU law on medical devices still being applied and the UK Notified Bodies remaining together with authorized representatives.
In any respect, it will be essential for the UK to create its own “British solution” and attract international investment. As mentioned by Lu Rahman, Medical Plastics News editor: “Brexit has been described as a ‘messy divorce’ but we have the opportunity to make it as painless as possible”.
We look forward and hope for a successful UK future.
It is time for medical companies to consider potential scenarios for their own specific businesses; including changes in strategic and commercial levels. We are happy to share information and analyses regarding the Brexit and discuss their implications for specific cases, contact us at [email protected]. Talk to you soon!