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Pharma and aerospace seek Brexit assurances after Nissan deal

Mon, 31st Oct 2016 15:24

* Nissan deal shows government "listening to business"

* Pharma and aerospace focused on regulation, R&D, talent

* Drugmakers next scheduled meeting with ministers Nov. 23

By Ben Hirschler and Sarah Young

LONDON, Oct 31 (Reuters) - Britain's pharmaceutical andaerospace industries, both big exporters, are stepping uppressure on the government for assurances about their futureafter last week's post-Brexit deal with carmaker Nissan.

The two sectors, which have been talking to ministers sincethe summer, are pressing their case after written assurances bybusiness secretary Greg Clark persuaded Nissan to invest in thecountry's biggest car plant, industry officials said.

Pharma and aerospace companies share the motor industry'sworries about trade barriers once Britain leaves the EuropeanUnion, but they also have deep concerns about regulation, theirability to recruit foreign staff and loss of EU science funding.

The discussions are part of a broader jockeying for positionamong businesses worried by the fall-out of Brexit, with financecompanies anxious to retain so-called passporting, allowingLondon-based banks to sell services across Europe.

The pharma and biotech industry will detail its prioritieson Nov. 23 when ministers next meet a life sciences steeringgroup co-chaired by GlaxoSmithKline Chief ExecutiveAndrew Witty and AstraZeneca CEO Pascal Soriot.

Nissan announced it would build two new models at its plantin the northeastern English city of Sunderland as a result ofthe agreement. Clark said on Sunday that the government aimed tonegotiate tariff-free trade for the motor industry with theremaining 27 EU member states.

Steve Bates, CEO of Britain's BioIndustry Association, saidthe deal showed the government was "listening to business",adding that drugmakers' needs were somewhat different, with abig focus on the right climate for research and development.

"For pharma and biotech, we are looking for fundamentalplatforms to drive our sector over a long time," he toldReuters. "It's not as obvious as one car plant in Sunderland."

Autos, pharma and aerospace are three notable successstories for British manufacturing following the demise oftraditional heavy industries such as steel and shipbuilding. Assuch, pharma and aerospace want parity of treatment.

"The prime minister has reportedly given assurances to carmanufacturers that that sector will not be negatively impacted,"Paul Kahn, president of Airbus Group UK told anindustry conference last week. "We need to work together toensure that as aerospace, defence and space sectors our voice isequally heard."

Airbus, which makes aircraft wings in Britain, is a majorexporter along with aero engine maker Rolls-Royce anddefence group BAE Systems.

In the case of Nissan, CEO Carlos Ghosn had brought mattersto a head by saying he would need a guarantee of compensation tooffset any impact of Brexit before deciding whether to build thenew models in Britain. Clark said no money had beenpromised to compensate for any imposition of tariffs.

TRACK RECORD

Other players may lack comparable binary investmentdecisions, but they want their track record to be recognised.

AstraZeneca, for example, is building a $500 millionheadquarters and research centre in Cambridge, while GSKcommitted $360 million to investment in British manufacturing inJuly, five weeks after Britons voted to leave the EU.

A worry for both drugmakers and aerospace companies is therisk that Brexit will mean Britain also leaves regulatory bodiesthat allow companies to sell products across Europe and beyond.

Both the European Medicines Agency (EMA) and the EuropeanAviation Safety Agency (EASA) offer one-stop-shops for endorsingproduct quality, which smoothes the sale of goods acrossborders.

Drugmakers warn that loss of access to the EMA could putBritish patients at the back of the queue for approval of newmedicines, since applications for a British licence would comeafter the European one, given the relatively small size of theUK market.

The EASA, meanwhile, is vital for aerospace firms since oncethe agency certifies a component it means many other globalbodies, including U.S. regulators, accept that certification.

Another big area of concern where pharma and aerospacecompanies want assurance is the looming gap in funding currentlyprovided by the EU for scientific research and development.

"Aerospace does quite well financially from that," PaulEveritt, CEO of industry group ADS, representing Britain'saerospace, defence, security and space sectors, told BBC radio.

"But more importantly the collaboration with universitiesboth here in the UK and in other parts of Europe, and part ofour integrated supply chain around the rest of Europe, helps usbe more competitive."

For global aerospace and pharma companies, Britain is asmall market and any post-Brexit economic strains could furtherdiminish its appeal, as highlighted by recent rows over drugpricing.

With growing strains on the National Health Service (NHS),some drugmakers are warning that Britain could lose its draw asa place for investment if the system does not pay up for newbreakthrough medicines.

"Companies will not come to the UK to invest in R&D,experimental medicine or clinical trials if the healthcaresystem is not adopting the most important innovations that arebecoming standard of care in other countries across the world,"Mene Pangalos, head of AstraZeneca's innovative medicines andearly development unit, told a meeting in parliament last week. (editing by David Stamp)

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