No-deal Brexit would see pharmaceutical exports to EU drop by 22%, peers told

Pharmaceutical exports to the EU would slump by more than a fifth if the UK exits the Brexit transition period without a deal, peers have been told.

Dr Louise Gill, head of policy at GlaxoSmithKline, told the Lords EU Goods Sub-Committee that if such a scenario played out at the end of the year preliminary data showed a decline in sales to the EU of 22.5%.

She said a simple free trade agreement (FTA) would be almost as bad, with a drop in exports of 22%.

However, Dr Gill said that if an FTA was coupled with a mutual recognition agreement – meaning both parties would allow goods manufacturing inspections and acceptance of batch testing performed either in the UK or the EU – exports would decline by 12.6%.

This would reduce the loss in exports to around two billion euro (£1.8 billion) per year, Dr Gill said.

Prime Minister Boris Johnson has insisted he will not accept the EU’s offer of a transition period extension beyond December 31, despite trade talks making slow progress.

Dr Gill told the committee: “Our European Federation for Pharmaceutical Industry and Association is conducting a study where they are looking at the cost estimates in relation to the free trade agreement and introduction of a mutual recognition agreement.

“Preliminary draft data that I can share today is showing that pharma exports are expected to drop by 22.5% in a no deal, 22% in a simple free trade agreement – so, this is one without mutual recognition.

“But only reduce by 12.6% in a scenario where we have a free trade agreement and a mutual recognition agreement.

“So, having a mutual recognition agreement would reduce the loss of exports by around two billion euro a year for the UK if we can have the free trade agreement and reach a mutual recognition agreement.

“Our biggest impact for our sector is having a mutual recognition agreement that supports good manufacturing inspections and allows the acceptance of batch testing performed either in the UK or the EU.”

Dr Gill said the industry wanted a smooth transfer of products between the UK and the EU.

She said that the option of non-tariff barriers would require duplicate testing and extra processes.

Dr Gill said: “We want to ensure the ease of movement of goods across borders and ensure we have swift access of our products to both patients and consumers, and this is our priority.

“In terms of costs and numbers, the European Federation of Pharmaceutical Industry and Association has noted that every month 45 million patient packs are supplied from the UK into Europe.

“Similarly, there are 37 million packs supplied from Europe into the UK.

“Non-tariff barriers will introduce additional processes into that movement and, of note, is the requirement for duplicate testing.”