AstraZeneca duplicating UK testing as Brexit looms
- AstraZeneca, one of the few big pharmaceutical companies headquartered in the U.K., has confirmed it only expects a small operational impact from Brexit. However, it is taking a number of steps to reduce any potential detrimental effects on patients, and predicts that fiscal guidance will remain within the prior range.
- One of the immediate changes announced will be the duplication of batch testing of 27 U.K.-tested medicines in Sweden. AstraZeneca will also have to replicate other critical production processes, both in the U.K. and EU.
- AstraZeneca also plans to coordinate drug licenses, make packaging material changes and reduce mutual interdependence between the U.K. and the EU, company executives said on AstraZeneca's Nov. 4 third quarter earnings call.
Europe accounted for $3.29 billion, roughly one-fifth, of AstraZeneca's sales for the first nine months of 2018, so any challenge to market entry for the company is likely to put a serious dent in its bottom line.
While it's still not yet clear what form Brexit will take, the creation of any kind of hard border between the U.K. and the EU is going to cause challenges for U.K.-based companies that want to supply into the EU. It's also likely to make it more difficult for companies exporting drugs manufactured in the EU into the U.K.
"Operationally, we have been preparing for Brexit since the referendum in 2016," AstraZeneca's chief financial officer Marc Dunoyer said on the earnings call. "To safeguard against frictional borders, we will move stock from the U.K. to European distribution centers to be as close as possible to customers. We will also build an additional six weeks of stock for U.K. supply, in line with the government request and four weeks as stock for EU supply."
During the transition period as the U.K. leaves the EU in March 2019, or if the U.K. crashes out of the European Union in a Brexit no-deal, the U.K. government has pledged to continue to accept EU medicine testing standards. AstraZeneca is speaking to the European Union and member state governments around the acceptance of U.K. testing standards, in an attempt to get more clarification on this.
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