brexit? and the future of business
TRANSCRIPT
And the future of businessBREXIT?
Mathew Shearman, Senior Account Manager at Ogilvy HealthworldJames Stewart, Associate Director at Ogilvy Public Relations
The EU referendum
Worker conditions
WHAT IS THE UK ACTUALLY VOTING ON?
ECONOMIC UNION
POLITICAL UNION
SOCIAL CHAPTER
Single market, not the Euro
28 memberstates
Council of EU:28 relevant ministers– 1 from each country
Also review law
EU Commission:28 members 1 appointed
by each country
They initiate law
They debate together
EU Parliament:751 elected MEPs– the UK has 73
Scrutinise and debate law
Debate again
No law
Law is passed
AGREE?
AGREE? AGREE?
no
yesyes
no
no
yes
yes
THE MAKING OF LAW IN THE EUROPEAN UNION
7 DAYS TO GO
BGM; ComRes; ICM; Ipsos; MORI; Survaion; TNS; YouGov (polls of >900 adults only)
43%
42%
12%
58%32%
9%22%
60%
13%
LEAVE REMAIN DON’T KNOW
A GENERATIONAL DIVIDE
60 years + 18-24 years
THE BREXIT PROCESS
ARTICLE 50
24th June - Autumn
2016(?)
RENEGOTIATION
2016-2018
Specific trade deals
Contribution to EU budget
NEW RELATIONSHIP
??
BREXIT ON BUSINESS
SINGLE MARKET
The impact on the UK economy will depend on changes to access
to the single market or new free trade deals.
• THE SINGLE MARKET removes barriers to trade and investment within
the European Union
• THE EUROPEAN MARKET is declining and trade deals such with India
may be more quickly formed
• Different assumptions:
• Anticipated drop in £, economic growth between 3% and 6% lower
• Boost from regulatory burden – 1.6% GDP?
• Maintain the single market with legal harmonisation and EU budget
contribution?
CURRENT TRADE RELATIONSThe UK export locations (not including services):
FOCUS ON LIFE SCIENCESA UK priority area
A BASE FOR BRANDS IN LIFE SCIENCES
A LIFE SCIENCES PERSPECTIVE EFPIA says that as part of the EU, UK pharmaceutical
companies can continue to benefit from:
EU Marketplace Pan-European R&D collaboration
EU advocacy on global trade issues
Harmonisedregulatory environment
LIFE SCIENCES IN THE UKThe UK is a high exporter & importer of pharmaceuticals:
$34.5 billion
$34.7 billionEUUK
400
0
-400
-800
-1,200
-1,600
-2,000
2
0
-2
-4
-6
-8
-10
DRUG SPENDING DECLINE FORECASTEDFollowing a projected dip in GDP, pharmaceutical sales
to the NHS would decline:
Figure 2: Change in forecast pharmaceutical sales, UK
Change in pharma sales, Brexit scenario compared to baseline (£m); left scale
% change vs non Brexitscenario; right scale
Source: The Economist Intelligence Unit forecasts
2015 2016 2017 2018 2019 2020
259
-1,223
-1,707 -1,664
-3982016Pharmaceutical sales: £18.7 bn
THE SINGLE MARKETING AUTHORISATION
The UK currently has a role on the Committee for Medicinal Products for Human Use (CHMP)
For medical devices, the CE mark gives access to the UK market
Pricing of treatments is a national responsibility – NICE plays a role on the European Network for HTA (EUnetHTA)
Potential impact on domestic drug access andlaunch sequencing
HARMONISED
REGULATORY
ENVIRONMENT
CLINICAL TRIALS: FROM INVESTMENT TO ACCESS
The UK is currently the top country for phase 1 trials, 2nd for phase 2 trials
The UK receives the second highest financial contribution from Horizon 2020 – EU research funding
EU public/private partnerships, such as the Innovative Medicines Initiative (IMI), ensure collaboration across borders
Regulatory burden shift for companies with UK-specific protocol?
PAN-EUROPEAN
R&D COLLABORATION
WHAT WILL HAPPEN AFTER THE REFERENDUM?And how should business respond?
What will happen after brexit?
NOBODY KNOWS
BUT… WE CAN ASSUME
There will be a period of TURBULENCE while the political and business environment come to terms with the result
• The British financial markets will drop and the pound will fall in value
• David Cameron will resign –Boris Johnson would be favourite to replace him
• Significant pressure will grow for Scottish independence
Britain will be forced to RENEGOTIATE its RELATIONSHIP WITH THE EU
• Will the UK join the single market? Will the EU let the UK join?
• How will the EU react to Britain negotiating tradedeals having left?
The British government will have to establish how it REPLACES ROLE the EU plays in the UK e.g. research fund like the Horizon 2020
There will be CHANGES to travel and working rights for EU CITIZENS in the UK
HOW SHOULD BUSINESS RESPOND?
Businesses will be UNDER
PRESSURE to assess the IMPACT OF BREXIT and make business decisions on this information:
• Vital to monitor the political environment immediately after the result
Likely to be a spate of COMPANIES ANNOUNCING
CHANGES TO BRITISH
OPERATIONS:
• Many listed companies will announce plans in Q2 reports
• Narrative likely to develop about businesses / investment drying up
Risk that companies seen to rush out will be subject to CUSTOMER/GOVERNMENTAL IMPACT
Opportunities for CORPORATES TO INFLUENCE GOVERNMENT AGENDA/BREXIT NEGOTIATIONSif done carefully
Don’t only worry about your British business– the EU WILL BE FACING ITS BIGGEST CRISIS YET
BUT EVEN WITH A REMAIN VOTE THERE WILL STILL BE CHANGES
The POLITICAL DYNAMICS in the UK willhave CHANGED:
• Conservative Party divisions
• UKIP increasingly able to attract former Labour voters
Britain will RESIST FURTHER EU CENTRALISATION
and may VETO NEW MEMBERS JOINING
Likely to be A REFERENDUM ON ANY FURTHER
EU TREATIES
WANT TO HEAR MORE ABOUT POLITICS IN BUSINESS?
MATHEW SHEARMANSenior Account ManagerOgilvy Healthworld
JAMES STEWARTAssociate DirectorOgilvy Public Relations