Are you ready for a future outside of the European Union?

Transcription

1 Are you ready for a future outside of the European Union? Key considerations for the Life Sciences sector November 2017

2 The UK is expected to exit the European Union from 29 March This has consequences for UK Life Sciences operations. Have you planned your response?

3 All life sciences companies trading in both the European Union and the UK will face changes post-brexit: A UK-held medicinal product Marketing Authorisation may not be mutually recognised in other EU countries A hard border between the UK and EU will present cross-border trade challenges Quality Release requirements may change Navigating the changes requires diligence and coordination. Lead times involved in getting ready to operate in a post-brexit environment mean that companies need to take action now to secure business continuity, regulatory compliance and market access in both the UK and EU. Anticipated Brexit timeline UK Referendum June Article 50 March 2017 Future relationship negotiations Draft framework agreement Ratification of deal by EU member states, MEPs, national Parliaments UK leaves EU Provisional transition by May 2021 Oct 2017 Oct 2018 Jan 2018 Oct 2018 Mar 2018 Mar 2019 Mar 2019 Are you ready for a future outside of the European Union? 1

4 Key implications what is known at this stage: Marketing Authorisation Holder Quality Release Supply Chain Physical & Legal Flows If the UK and the EU do not agree to mutual recognition: EU Marketing Authorisations must be transferred from the UK to an EU-based company The UK will require a separate license recognised by Medicines and Healthcare products Regulatory Agency (MHRA). Quality-related operations and systems must be relocated to be performed in the EU: Qualified Person Responsible for Pharmacovigilance Pharmacovigilance System Master File Sites of batch release and authorised batch control The UK will require separate MHRA-recognised quality elements Physical product movements from UK to the EEA will be deemed as imports into the EU Buy and sell operations between UK and the EEA might be deemed as imports As such, there will be increased documentation for imported goods European shipments into the UK will likely face stricter customs border control Brexit necessitates multiple interdependent UK-EU changes. We can help you choose the right path for your business. Relative cost of changes Illustration: example Brexit operational changes New EU Co including people impacts IT systems changes Structural, reporting Registrations and licenses Applications filing EU stock hub Logistics/ warehouse sourcing Quality control testing Lab test capability, partner sourcing, equipment, tech transfer Brexit advice Including Legal, Tax Legal entity, office recruitment, salaries, relocation Example steps over time Implement by March Are you ready for a future outside of the European Union?

5 Many organisations have struggled with disjointed Brexit planning. EY s integrated approach accounts for all Brexit impacts, through a dynamic plan that brings together all relevant business functions. Diagnose Conduct scenario analysis to identify the client-specific exposures and opportunities arising from Brexit Business impact analysis Identify and articulate specific impact areas including: Regulation and market access Supply chain and quality Trade and customs Tax and finance Customers People Sector impact analysis Identify broader sector implications including: Structural shifts in the value chain Regulatory body changes e.g., European Medicines Agency Potential changes to competitive landscape Industry lobby groups Plan Develop a dynamic, scenario-based plan to respond to any Brexit outcome, detailing no-regrets responses and risk mitigations Supply chain and operations Locations: EU stock hubs, batch quality testing, clinical trials Supplier and contract readiness Tax planning Tax effectiveness assessment Import VAT assessment and mitigations Customs Data, technology and process readiness Mitigations (e.g., customs procedures, Authorised Economic Operator (AEO) status) People Talent retention, workforce strategy, mobility Regulatory and legal Regulatory and quality standards review Corporate structuring and EU entity set-up Data, regulatory audit trails Financial strategy Foreign exchange/hedging strategy EU funding eligibility Strategy and transactions Business restructuring and relocation Market and competitor analysis Strategic and operational planning Acquisition and divestment strategy Products, channels and customers Market access/marketing authorisation Customer dynamics per country Execute Deliver the relevant changes, to ensure your business is ready for post-brexit operations Business continuity Regulatory approvals and ongoing market access Inventory ownership/policy for time-sensitive products Customs warehousing Authorised Economic Operator (AEO) status Import data and customs clearance preparation Third-party contracts Clinical trials integrity Capability build Technology (e.g., SAP configuration, audit trails) People (talent retention, hiring, team moves) Processes (talent mobility, customs administration, filings) Data (product classification, import valuation) Strategic moves Legal entity establishment Business and asset transfers Network/supply chain change Plant investments/closures Offshoring/onshoring Portfolio adjustments Acquisitions and divestments Are you ready for a future outside of the European Union? 3

6 Benefits of our approach We have the UK/EU political connections and internal cross-functional expertise to interpret the latest directives, and ensure that client requirements are accurately scoped not overstated. We have structured many Life Sciences European operating models, establishing the legal, regulatory, financial and supply chain elements. We apply our Brexit scenario models and our complete functional activity plan with our clients, to aid decision-making and time-critical change-planning Brexit provides a unique opportunity to re-think your UK-EU business and reconfigure for the future 4 Are you ready for a future outside of the European Union?

7 Contacts Mats Persson Brexit Strategy Lead T: M: E: Formerly a Special Advisor to the Prime Minister and a member of the UK Government s EU negotiation team, Mats now heads up EY s Brexit Strategy team. Mats is currently leading the Brexit planning for a number of leading companies across regulated sectors, including Life Sciences. Angela Bowden Life Sciences Supply Chain Director, UK and Ireland T: M: E: abowden@uk.ey.com Angela has worked with Life Sciences companies both large and small on various global trade initiatives, working alongside EY s Tax, Legal and Commercial teams. Her focus includes European operating model set-up, supply chain and network strategies, duty optimisation and customs compliance, including impacts on thirdparties in the supply chain. Marc Bunch Global Trade Tax Lead, UK and Ireland T: M: E: mbunch@uk.ey.com Marc leads EY s Global Trade practice. He has 23 years experience supporting organisations on market access, navigating borders and managing Free Trade Agreements. He has worked extensively in the Life Sciences sector including advising on centralised structures, managing tax implications and the interaction between transfer pricing and customs. Virginie Lefebvre-Dutilleul Life Sciences Law Lead T: M: E: virginie.lefebvre-dutilleul@ey-avocats.com Virginie leads EY Life Sciences Law globally. As a lawyer, Virginie has been advising companies in the Life Sciences sector on their strategic projects for more than 20 years. Virginie and her team are currently advising Life Sciences companies on post-brexit legal and regulatory scenarios. Are you ready for a future outside of the European Union? 5

8 EY Assurance Tax Transactions Advisory About EY EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities. EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com. Ernst & Young LLP The UK firm Ernst & Young LLP is a limited liability partnership registered in England and Wales with registered number OC and is a member firm of Ernst & Young Global Limited. Ernst & Young LLP, 1 More London Place, London, SE1 2AF Ernst & Young LLP. Published in the UK. All Rights Reserved. ED None EY indd (UK) 11/17. Artwork by Creative Services Group London. In line with EY s commitment to minimise its impact on the environment, this document has been printed on paper with a high recycled content. Information in this publication is intended to provide only a general outline of the subjects covered. It should neither be regarded as comprehensive nor sufficient for making decisions, nor should it be used in place of professional advice. Ernst & Young LLP accepts no responsibility for any loss arising from any action taken or not taken by anyone using this material. ey.com/uk