The U.K.’s looming rupture with the EU threatens to slow goods at borders that are now wide open and force companies to duplicate regulatory efforts. Pfizer said in an email that its costs stem from transferring product testing and licenses to other countries, changing clinical trial management procedures, and other preventive measures.
The company is working “to meet EU legal requirements after the U.K. is no longer a member state, especially in the regulatory, manufacturing and supply-chain areas,” according to a filing last month where it cited the cost estimate.
Pfizer — which got about 2% of its $53 billion in 2017 revenue from the U.K. — highlights the pharmaceutical industry’s dilemma as it braces for a rocky, no-deal Brexit. Uncertainty about the fallout has forced companies including AstraZeneca (azncf), GlaxoSmithKline (gsk) and U.S.-based Merck (mrk) to prepare for a worst-case scenario. Hundreds of millions of pounds are being spent on getting ready that could have gone to developing new treatments, the head of an industry trade group said in June.
People and Products
Pharma companies around the world have long relied on their ability to move people and goods in and out of countries, and Britain’s departure from the EU could complicate many aspects of their operations. The U.K. Department of Health and Social Care last month told drugmakers to build six-week stockpiles of their products in preparation for potential shipping delays.
Much of the industry had already begun hoarding medicines or investing in new facilities to release drugs. AstraZeneca, which has committed to setting aside a three-month supply of its products, said it can’t raise inventories of one of its cancer drugs because its production facilities are already at full capacity. Brexit also threatens supplies of medical isotopes that are used to diagnose and treat about 1 million people in the U.K. each year, according to an article in the British Medical Journal.
Companies large and small are enumerating expenditures from the divorce. Glaxo has also estimated as much as about $100 million in costs. Dechra Pharmaceuticals (dphaf), a veterinary drug company based in northwest England, said it may need to spend as much as 2 million pounds ($2.6 million) in the event of a hard Brexit, in part to duplicate testing and move product registrations to the EU to avoid trade barriers.
Controversy continues to swirl around the U.K.’s plans as Prime Minister Theresa May works to hammer out a compromise agreement to leave the EU. Brexit has already cost Britain more than 2% of its economic output, according to an analysis by UBS Group published Monday.
Thousands of Miles
Health-care companies based thousands of miles from Brexit ground zero have been warning of an impact on their businesses since the 2016 referendum. Johnson & Johnson, McKesson Corp. and Regeneron Pharmaceuticals Inc. are among those in the U.S. that have flagged the risk.
Intercept Pharmaceuticals, the New York-based maker of the Ocaliva treatment for a rare liver disease, cautioned in an Aug. 7 filing that Scotland and Northern Ireland may hold a vote on whether to leave the U.K., and that other countries may follow Britain out of the EU.
“Our ability to continue to conduct our international operations out of the United Kingdom, where the headquarters for our international operations is located, may be materially and adversely affected,” by Brexit, the company said.
Pfizer began to refer to Brexit as part of a challenging global economic environment in filings last year. The company said it’s pushing the U.K. and EU to work out an agreement to keep their regulatory systems coordinated after the separation.
In addition to supply and regulatory concerns, Pfizer said it may have to reorganize management of its clinical trials. Human testing of new drugs and devices conducted in the EU must be sponsored by an entity based in the bloc, and companies would need to establish new representatives in the EU for their studies.
“In order to minimize any potential patient impact we have undertaken work to ensure we can continue to supply in the EU and the U.K. covering all Brexit scenarios,” the company said.