LONDON – Preparations for a no-deal Brexit are intensifying, with the government repeatedly saying the U.K. will leave on Oct. 31, and little sign that an agreement on an orderly exit will be reached by then.
The U.K. Bioindustry Association (BIA) has stepped up its efforts to help members prepare, planning a series of events around the country and switching from monthly to weekly webinars, to provide up-to-date guidance in what is a fluid situation.
Under instruction from the Department of Health, the sector has been preparing for many months, building stockpiles, expediting batch releases and planning alternative routes for freight.
But, said Steve Bates, CEO of the BIA, "We are aware of a wide range of life sciences companies, particularly SMEs, which require more information on what a possible no-deal Brexit means for their company."
Earlier in September, the U.K. Parliament passed a bill intended to block a no-deal exit and request an extension to Jan. 31, 2020, with the intention of allowing time for a general election and for a new government to agree to a deal with the EU.
But speaking on the (now weekly) webinar on Friday, Bates advised members to stay focused on the possibility of crashing out of the EU next month.
"The government has repeated its intention to leave the EU on October 31, with or without a deal and despite Parliament's recent actions, it would be unwise for companies to assume that a no-deal Brexit has now been ruled out," Bates said.
A poll of those listening to the webinar showed 58% believe there will be an extension, compared to 33% who think there will be a no-deal Brexit, perhaps reflecting why a wide range of life sciences companies are not fully prepared.
Speaking on the webinar, Anusha Panjwani, of the Office for Life Sciences, the government body coordinating Brexit preparations for the sector, reinforced the need for action.
"A large number of you must be thinking 'Should we still prepare for a no-deal,' and the answer to that is yes," Panjwani said.
Even if there is an extension to next January, there may still be a no-deal situation. "Given the uncertainty, you've got to continue to prepare for all scenarios, including a no-deal scenario," said Panjwani.
Also on Friday, the independent watchdog, the National Audit Office (NAO), published a review of preparations made by the Department of Health to ensure supplies of all products used in the National Health Service (NHS) are maintained if there is no deal and the U.K. is outside the EU single market and customs union.
Of 12,500 prescription and over-the-counter drugs used in the NHS, 7,000 come from or via the EU. As of Sept. 20, companies had reported they held six weeks' stock of 72% of those products.
For medical devices, 58% of 189 companies the Department of Health has identified as priority suppliers confirmed they would have a six-week stockpile; 14% said they plan to stockpile less than six weeks of goods; and 29% did not respond to the request for information.
Separately, the Department of Health is spending £95 million (US$117 million) on a stockpile of medical devices and high-volume clinical consumables, of which £85 million was in place on Sept. 20.
More of a concern now is how stocks will be replenished.
Most of the drugs, medical devices and clinical consumables imported from the EU come via the shortest sea crossings to the ports of Dover and Folkestone, which the government estimates will be operating at only 40% to 60% of capacity if new customs checks are introduced at the border in France. Flow of goods is forecast to improve to 50% to 70% of current levels after three months and to be restored in 12 months.
According to the NAO report, only 25% of companies importing drugs have put in place arrangements to re-route supplies. The government is procuring extra freight capacity, on which drugs and medical devices will get priority, but the contracts are not expected to be awarded until Oct. 12.
That is less than three weeks before the U.K. is scheduled to leave EU, and until the contracts are awarded, companies will not know what capacity is available, and where. The BIA and other trade bodies have continuing concerns about the quality of practical information from government on the precise border processes after Oct. 31, and how the government-procured freight services will operate.
"The NAO's analysis shows there is significant work still to do, there is a risk of delays and time is extremely limited to put in extra freight capacity," Bates said. "It's sobering reading."
Meanwhile, companies remain unclear about exactly what they need to prepare for. "The U.K. government information is dynamic and it is continuing to update. It is confusing and there is a lot of it, and it is not all placed in legal certainty yet," said Bates. Tariffs are an issue that is unlikely to be clear until the last minute. "We don't know what tariffs the EU will impose," Bates said. "It's been difficult to get an answer."
The most important thing companies can do to avoid their goods being held up at the border is to be sure the manifest is in the driver's hand, Bates said. "I fear the uncertainty will continue from a business perspective at least until the third week of October."