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Brexit Trading Unknowns

As the famous quote goes, there are known knowns, known unknowns, and also unknown unknowns. And that very much applies to the current Brexit negotiations between the UK and the EU. We know there are red lines on both sides, but the overall outcomes are still unknown. What is clear to me and my company is that businesses must prepare for every eventuality – and start right now (if they have not done so already). Post-Brexit EU trade deal negotiations are continuing, but the UK will come to the end of the Transition Period on December 31, 2020.

But the first question for UK businesses: Where should we start? The best source of information, if you are just beginning the process, is where you can find the latest government guidance on preparing for the end of the transition period. For most pharma businesses, the guidance on importing and exporting goods with the EU is particularly important. If you can’t find the answers you need, you can also make use of an enquiry service run by the Department for International Trade (DIT).

My company manufactures and supplies generic medicines to both the UK and international markets. We are actively making plans to mitigate any disruption to our import and export activities from the EU, particularly with our supply chain. There is no import duty on “finished” pharmaceutical packs, but we are concerned about disruption to our supply chains and the time taken to get products to destinations through customs. We’re also checking tariffs that may be payable under the new UK Global Tariff that will apply to goods imported from around the world, unless there’s a trade agreement in place.

One of the most important actions we’ve taken is to apply to be an Authorized Economic Operator (AEO), which is an international standard accreditation given by HMRC, which shows that our supply chain is safe and secure. It also ensures that the holder may be able to benefit from arrangements under Mutual Recognition Agreements (MRA), which are agreed with third country customs authorities. To achieve this, a business must submit an application to UK Revenue & Customs, which is then followed by an audit and inspection of the security and supply chain. To help prepare for the audit, we conducted a gap analysis to further improve our processes, which were fully reviewed in line with the criteria. We believe that the AEO (c) and (s) standards will keep us in good stead when it comes to trading not only with the EU, but also with the rest of the world.

For importing, businesses will have to make customs declarations when importing goods from the EU. Be aware that from January 1, 2021, the rules for importing some types of goods will change. You should also make sure you have secured an EORI number starting with “GB,” checked the rate of tax and duty, and looked at ways to speed up the importing process.

All export shipments to the EU will also require a customs declaration, and you will need to be aware of licensing requirements and rules for the goods you export. For example, the rule for pharmaceuticals entering the EU is that any product being used in the EU, and going to an end patient there, must be batch released by a Qualified Person within the EU.

Pharmaceuticals manufacturers and suppliers are proactively taking action to ensure there is no disruption to the supply of medicines. You may wish to look at what action your logistics partners are taking. For example, some haulage providers are taking part in Alternative Routing, which is worth exploring and may help avoid delays at Dover, UK, and Calais, France.

In the event of a no-deal Brexit, we have built contingency plans to release batches for our patients in the EU through a site in the Republic of Ireland. Having an EU base will also enable us to comply with EU regulations around pharmacovigilance and the licensing of medicines in the EU from an EU territory. Another high priority for us is to work with the UK Department for Health & Social Care (DHSC) to ensure we are able to continue to supply our patients in the UK, as well as exporting medicines to patients who need them “on time” – especially as the risks of a second Covid-19 wave this winter are all too apparent.

My advice to businesses is to look at all of your known knowns and unknown knowns, and start preparing for the unknown unknowns – or, put another way, every eventuality. Only then will you be as prepared as you can be.

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About the Author
Nik Kotecha

Chief Executive of Morningside Pharmaceuticals Ltd, Department for International Trade (DIT) Export Champion and a CBI Regional Councillor, UK.

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