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A healthy scepticism could serve our health sciences sector well in the face of the looming calamity that is Brexit, says John Kennedy.
As Brexit beckons, Ireland’s health sciences scene – including various life sciences, pharma and medtech players – is correct to be battening down the hatches.
It is clear that the famed British stiff upper lip is quavering. British prime minister Theresa May’s far-from-inspiring performance in Salzburg, where her Chequers plan was shot down by European leaders, was an eye-opener. As was her petulant demand that EU leaders should offer an alternative plan to smooth the UK turbulent departure from the EU next year.
The troubling thing about all of this is that no one has a plan. Even a UK self-assuredly hellbent on economic destruction would be much more inspiring if it was at least confidently swaggering toward a boisterous and less ignominious exit from something that has worked well for them for more than 40 years.
Perhaps a People’s Vote could sort this out and one day make the last few years look like a blip, a moment of madness, a rush of blood to the head. But no one knows at this point.
Many industries are watching Brexit closely. But you get the sense that Ireland’s health sciences sector – including entrepreneurs in life sciences and employers at massive manufacturing plants producing drugs and medical devices – is taking the pulse of this one very seriously.
You see, the sector, which includes a lot of US multinationals and even start-up companies whose futures are dependent on capturing a slice of the US market and winning vital Food and Drugs Administration (FDA) approval to sell goods, also has a lot to lose if the UK, one of Europe’s biggest economies, crashes out.
The real cost of Brexit so far is the uncertainty
The sector already had to weather the calamity of US president Donald Trump’s rhetoric about taxes in recent years, so it is already seasoned as the next wave of danger comes from the UK.
To get a sense of what is at stake, here are a few numbers:
- Ireland is the seventh-largest exporter of medicine and pharmaceutical products in the world.
- Ireland is a home for 24 of the world’s top biotech and pharma companies.
- In 2015, pharma exports reached €39bn. More than 25,000 people are employed in the industry.
- In total, there are more than 90 biopharma plants located in Ireland, out of which 33 are approved by the FDA to export products to the US.
- The top 10 pharmaceutical companies in the world are here, including Johnson & Johnson, Allergan, Novartis, AbbVie, Abbott, Teva, Eli Lilly and Genzyme.
- The evolution towards biologics has seen more than €10bn invested in new biological production facilities in the last decade.
- There are more than 18 biotech manufacturing facilities located across Ireland today, up from just two in 2003.
These do not include the panoply of activities taking place, ranging from cutting-edge research bodies backed by Science Foundation Ireland on Ireland’s university campuses, to the high standard of trained workers emerging from the National Institute for Bioprocessing Research (NIBRT).
And then there is the vibrant entrepreneurial scene that includes established indigenous players such as Cook Medical in Limerick and Nora Khaldi’s Nuritas in Dublin, which could change the very nature and supply of food long into the future.
So, a lot is at stake.
Last week, the Irish Medtech Association (IMA) warned that Brexit is expected to lead to greater customs costs and skills shortages. This is because Brexit threatens to cause a lot of expensive nitty-gritty, governing everything from how products will be sold over counters in the UK, to a range of different regulatory and administrative burdens.
“We have been advocating for an outcome to talks that reflect the unique nature of the medtech industry and its role in delivering patient care,” said IMA director Sinead Keogh in a statement last week. “We need to minimise disruptions to existing supply chains, with many raw materials and component parts originating or transiting through the UK leading to uncertainty as we look to the future.
“Two-thirds of Irish Medtech members surveyed identified disruption of transit through the UK to the rest of the EU as the top Brexit concern. That’s along with half of companies saying they expect Brexit to negatively impact the cost of customs, and the same number saying skills shortages in the areas of distribution, customs and logistics were a risk to their businesses.
“Another important issue is the mutual recognition of CE marks. Before going on the market, manufacturers in the EU are responsible for demonstrating that their products meet EU safety, health and environmental protection requirements. The CE mark symbolises that they meet these strict requirements and can be sold safely. Notably, with nearly half (43pc) of Irish Medtech Association members using UK-notified bodies to gain CE mark, mutual recognition is essential, notably for existing technologies on the market.”
Some companies are already taking pre-emptive steps. It recently emerged that Galway supplement business Revive Active is investing €500,000 in a new manufacturing facility in Mullingar to take back manufacturing operations from a facility in Wales where it outsourced the service. According to The Irish Times, the company is taking no chances and if there is a hard Brexit, then it will continue to manufacture in Wales and serve retailers from there to avoid customers and tariffs.
Keeping a healthy outlook
But it may not all be scary.
In a recent interview with Siliconrepublic.com, EY’s head of life sciences and medtech, Aidan Meagher, opined that Brexit could actually be influencing foreign direct investment (FDI) decisions in Ireland’s favour because US giants in particular need a route to the EU market.
“The outlook for the sector is very positive because of the physical infrastructure and the history of the sector.”
He also said that Ireland stands to benefit from the convergence between traditional medical devices and new technology. “Brexit is forcing decisions because companies need a route to the EU market,” Meagher said.
Crucially, the medical devices, pharma and health sciences sectors are ones that Irish negotiators – including An Taoiseach Leo Varadkar, TD – need to keep top of mind in further Brexit talks.
There is a lot at stake, including a success story that comprises an entire industry devoted to keeping us all healthy and well.
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