Speculation has abounded in recent weeks regarding the short and long term consequences of Brexit. For the pharmaceutical industry, there are ramifications both in the UK and across continental Europe.

1. www.simon-kucher.com
Brexit’s implications on the
pharmaceutical industry
Pricing, market access and trade
Marc Matar, Partner
Sinead O’Sullivan–Carty, Senior Consultant
August 2016
London Office
1 Plough Place
London, EC4A 1DE, UK
Tel. +44 207 832 6820
E-mail: marc.matar@simon-kucher.com

2. Speculation has abounded in recent weeks regarding the short and long term consequences of
Brexit. For the pharmaceutical industry, there are ramifications both in the UK and across
continental Europe.
Pricing volatility
Coping with short term currency fluctuations and long term IRP implications
The most immediate market consequence of the Brexit vote is currency fluctuation, resulting in
continued uncertainty impacting European prices.
For novel products launching in Europe: A lower UK price may affect reference basket prices
for those European markets using international reference pricing (IRP) as the driving price
setting mechanism.
For post-launch products: The risk of re-referencing and price cuts arise.
Long-term, European markets may exclude the UK from their reference baskets due to the market’s
exit from the union.
Historically, the UK has been an early-to-launch market due to free pricing typically creating a higher
anchor for IRP. However, the UK may no longer be an attractive or supportive option in the early launch
sequence if European markets exclude the UK price from their reference baskets. Pharmaceutical
companies now need to assess and adapt their European launch sequence strategies as well as
monitor and minimise EU pricing risks for established products.
Within the UK, pharmaceutical pricing rules are expected to remain unchanged until the expiry of the
PPRS and subsequent re-negotiation in 2018. It’s the long term prospects in this new and evolving
competitive environment that will put UK launch prices at risk. With the NHS already under cost
pressure, and significant additional pressure expected depending on the economic impact of Brexit,
NHS regulators may need to take a harder stance on new drug and device prices, using it as an
opportunity for cost containment.
Market access
A new regulatory era
The final post-Brexit trade deal will have immediate, primarily UK-centric repercussions, potentially
transforming the UK’s regulatory structure. Adopting the EFTA or WTO model routes will lead to the
UK having greater or complete control over the verdict and speed of product and device market
authorisation.
A move away from EMA-led market authorisation in the UK will mean the expansion of the MHRA. The
result of such an expansion is unknown especially how process timelines and outcomes could be
affected. How easy will it be to gain UK market authorisation and how long will this take?
A new era for the MHRA therefore represents a potential market access risk.
Pharmaceutical companies may in the future consider deprioritising UK launches due to the time
and cost commitment of an additional regulatory application. Manufacturers may therefore need to
redefine their UK launch strategies. As we have already heard from patient groups this further adds
concern around patient access and outcomes.

3. Trade negotiation
Competing in the face of uncertainty
The UK trade agreement negotiated with the EU will impact all industries. If the UK no longer has
access to the single market, the revision of trade duties, routes, and customs processes is required.
Moreover, the UK may set its own import tariffs during negotiations.
For the pharmaceutical industry in particular, this is likely to impact parallel trade – import and export
of pharmaceutical products between different countries. The imposition of tariffs will discourage and
thus limit or halt parallel trade in some cases. This may benefit pharmaceutical companies who will be
able to better manage their revenues per market. However, in the UK market, less parallel trade is
likely to mean less competition, which in turn could lead to greater pressure on NHS resources.
Any trade agreement will also have serious consequences for UK-based pharmaceutical or MedTech
companies. Imposed duties or tariffs will impact profitability and could reignite the debate around
strategic relocation of headquarters and production. Furthermore, whilst uncertainty remains, there are
further risks to UK business, as companies will have lower willingness to invest heavily in the interim.
In the long term, Pharma is a global industry which should be insulated from Brexit consequences
commercially. We can look to Switzerland as evidence that life outside the EU is compatible with a
thriving pharmaceuticals sector. What remains uncertain is whether EU governments will grant the UK
similar privileges.

4. Simon-Kucher & Partners
Simon-Kucher & Partners is a global consulting firm specialising in TopLine Power®, which
encompasses strategy, marketing, pricing, and sales. Our practice is built on evidence-based,
practical strategies for profit improvement via the top line. Simon-Kucher & Partners is regarded
as the world's leading pricing advisor and thought leader.
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