Category: Economics

What the Brexit Vote Means for Biotech

What the Brexit Vote Means for Biotech by Mickael Marsali

With uncertainty spreading throughout much of Europe, the Brexit vote has left many industries in a panic over what’s to come. Voters have effectively altered the future of many countries economies across Europe, though they may still not fully understand the gravity of their decision.

What the exact implications of the vote will be for biotech, a growing industry in the UK, are still hard to predict. There are a few key concerns rising to the top of people’s minds, but overall, the sector remains optimistic that minimal changes and disruptions will need to take place.

One concern for not only the UK, but Europe as a whole, will be how the European Medicines Agency’s (EMA) regulatory structure will operate separate from the EU. The EMA, based in London, has been in charge of the central marketing of medicines in both the European Union and the European Economic Area (EEA). The MHRA, UK’s primary drug regulator, have played an increasingly authoritative role within the EMA, being responsible for nearly a third of its regulatory work.

Many are worried about the fate of the unified patent initiative (run on European basis) as well as the future flow of investments. Until now, the UK has offered investment incentives, and freedom of employment, but this will certainly change in light of the recent vote.

Many companies like F2G, an antifungal company, have taken advantage of these incentives in the UK and would like to continue doing so. The CEO, Ian Nicholson has expressed his concern, exemplifying that almost a quarter of his workers are from other countries within the European Union. He claims that not only his company, but the market as a whole, relies on the freedom of these individuals. And he believes this reliance will only increase moving forward. The Brexit vote has put an unexpected wrench in this shift.

As a whole, there is reason to believe the Brexit vote will not affect the Life Sciences sector of the market too drastically; however, it will still be a fairly rough patch for many in the coming weeks and years. We can certainly expect small changes to legislation, but ultimately the UK will benefit from not changing anything too drastically as this will require time and resources they simple don’t have.

The Brexit & Our Economy

The Brexit & Our Economy by Mickael Marsali

With the much anticipated June 23rd referendum fast approaching, voters will soon decide if the Britain will, in fact, leave the European Union. To the surprise of some, the polls are showing nearly an even split amongst eligible voters. Britons starkly disagree as to the Brexit’s potential geopolitical, economic, and social impact. Its economic consequences, however, seem to sit at the heart of this discord and is the subject of impassioned rhetoric from both sides. Unsurprisingly, the majority of Britons simply want to pursue the option that would leave themselves, and the nation, better off financially.

While the long-term economic impacts of the Brexit are in dispute, it is nearly impossible to argue against the immediate economic losses that would occur as a result of leaving the EU. John Greenwood, who serves as a Senior Economist at Invesco Perpetual, notes that the negotiation period with EU officials would last a minimum of two full years, and many experts believe this time period could be closer to a decade.  The UK would be forced to establish new trade agreements not only with the European Union but all states Britain trades with under EU membership. The Bank of England has publicly warned that the Brexit is the biggest risk to the nation’s economic well-being.

Although more controversial, the majority of economists have concluded that Britain leaving the European Union will negatively impact the UK economy in the long-run. A recently released study from the Centre for European Reform highlights the benefits of EU membership, especially as it relates to trade gains. The study found that British trade with the European Union has been more than 50% higher than it would be as a non-member nation.

This trade loss would be partially offset by the nearly £9 billion Britain gains by eliminating the yearly contribution to the EU budget. However, most economists agree, to the dismay of Brexiters, that leaving would severely hurt FDI (foreign direct investment). Greenwood notes that the European Union has served as the UK’s largest source of foreign direct investment over the last five years. The economist warns the Brexit would make the financial services sector especially vulnerable.

Greenwood also expresses concern over the UK’s sizeable account deficit, which is equal to 7% of the GDP.  He predicts that, if the Brexit were to come to fruition, the sterling would continue its depreciation.

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