A Recipe for Brexit Success

The words of Dickens highlight the internal conflict facing the UK people following the referendum. Like many Americans, I’ve been intrigued by the UK debate surrounding the Brexit vote. The new Prime Minister, Theresa May, has vowed “to make Brexit a success,” so clearly there’s no going back. So what must happen going forward to ensure continued success for the UK biopharmaceutical industry? The word “continued” must be emphasized because the UK already has a dynamic pharmaceutical industry. Large global players like GlaxoSmithKline and AstraZeneca are headquartered in the country, with significant research facilities, and numerous other major and smaller biopharmaceutical firms have major operations there too.

And what is “success”? I’m a passionate believer in the philosophy of Roy Vagelos, former CEO of Merck Sharp & Dohme, who believes that a company focus on addressing unmet medical needs by improving patient health through extraordinary science will also benefit shareholder value, while also garnering respect from society for its accomplishments. The lifeblood of any pharma company is its ability to sustain drug innovation through prudent risk-taking, whilst also making effective investments in R&D that mitigate significant uncertainties throughout the entire project/product lifecycle. Thus, if the UK pharmaceutical industry is to continue thriving in the future, political and business leaders will need to develop policies that sustain the environment required for drug innovation and development, post-Brexit vote.

The global pharma industry is on the cusp of tremendous change, as expertly noted by the IMS Institute for Healthcare Informatics, which highlighted the many opportunities, challenges, and uncertainties that lie ahead (1). Given experience and insight gained from my past 34 years as a big pharma executive, pharma industry consultant, and academic economist/public policy/pharma researcher, I’d like to offer some outside-UK policy perspectives on what I think UK leaders must do in a post-Brexit world to sustain the country’s pharmaceutical success.

First, continued intellectual property protection is essential for continued R&D and incentives for biopharmaceutical innovation – academic research continually highlights this factor as the most important to sustaining innovation (2). Second, immigration policies must be tailored to ensure the attraction and retention of highly specialized skilled labor to the UK. However, this labor force also needs to encompass the draw of talented graduate students at UK universities, who often work on basic research projects in collaboration with pharmaceutical firms. Not surprisingly, like in the US where biopharmaceutical clusters have formed around – and collaborations developed with – major academic centers, we see similar movements in the UK around its premier research universities; for example, AstraZeneca has established a major global R&D center at the Cambridge Biomedical Campus. Third, various forms of capital are also required to work in conjunction with skilled labor for sustained R&D success, such as specialized scientific capital equipment, public infrastructure, and funding of basic research through governmental, research foundation, and venture capital organizations. Prior empirical work has shown that the collaborative US R&D model across the biopharmaceutical research ecosystem (although fragmented) has a greater proportion of riskier projects in their portfolios than their European counterparts (3). This evidence confirms prior work on the importance of economies of scope (not scale) in positively affecting R&D productivity (4). As the pharma industry shifts its R&D emphasis to specialty medicines involving large molecule, biologic, and genomic approaches, a UK environment capable of sustaining a culture of innovative scientific R&D will become even more crucial. Lastly, a UK-EU relationship must not disturb transnational pharmaceutical alliances. Prior empirical work has demonstrated that products developed with alliances have an increased likelihood of success for the more complex phase II and II clinical trials (5).

The UK always seemed to have a “one foot in” approach to the EU; it never adopted the Euro and its geographic separation from mainland Europe has affected its own political and social development. I view the challenges that lie ahead as opportunities for the UK and its pharma industry. As long as wisdom prevails over foolishness, the best of times can still lie ahead.