Brexit to cost RM414m

Pfizer highlights the pharma industry’s dilemma as it braces for a no-deal Brexit

By BLOOMBERG

LONDON • European companies aren’t alone in their Brexit pain.

Pfizer Inc, the US-based drug behemoth, said its costs for dealing with the upcoming split will reach US$100 million (RM414 million).

The UK’s looming rupture with the European Union (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 licences to other countries, changing clinical trial management procedures and other preventive measures.

The company is working “to meet EU legal requirements after the UK 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 US$53 billion in 2017 revenue from the UK — highlights the pharmaceutical industry’s dilemma as it braces for a rocky, no-deal Brexit.

Uncertainty about the fallout has forced companies including AstraZeneca plc, Glaxo- SmithKline plc and US-based Merck & Co 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 count r ies, and Br itain’s departure from the EU could complicate many aspects of their operations.

The UK 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 onr million people in the UK 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 US$100 million in costs.

Dechra Pharmaceuticals plc, a veterinary drug company based in northwest England, said it may need to spend as much as £2 million (RM10.76 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 UK’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 AG published Monday.