50,000 New Drug Tests Among Brexit Worries for Pharma Companies

(Bloomberg) -- Global drugmakers from Johnson & Johnson to AstraZeneca Plc warned that potential trade and regulatory hurdles may burden them with a host of additional costs after Britain leaves the European Union.

In written testimony released in advance of a U.K. government committee hearing, pharmaceutical companies called for continued ease of access to the EU market and action to ensure they don’t face restrictive tariffs, delays at ports and divergent rules after Brexit. Others raised concerns about a possible departure of skilled workers and a blow to the country’s reputation as an attractive place to carry out research.

Johnson & Johnson, in one example, estimated that it could face as many as 50,000 additional tests of its products annually at a cost of almost 1 million pounds ($1.35 million) if there’s no mutual recognition of testing between the U.K. and the EU. Merck KGaA cautioned that post-Brexit tariffs might pose “significant” costs for the German company.

Without EU membership, U.K. drugmakers may have to pay duties as high as 6.5 percent on exports of products and ingredients, AstraZeneca said. That would cost the Cambridge, England-based company as much as $31 million in annual duties, with the majority being paid to Mediterranean and Asian countries, while its imports to the U.K. could face about $5 million in duties, it said.

Drugmakers fear that a Brexit with no deal would mean the U.K. reverts to tariffs set by the World Trade Organization on U.K.-EU trade. Companies would find themselves outside the rules and regulations of the single market that they’ve built their businesses around for decades.

©2017 Bloomberg L.P.