Brexit Schmexit: What This Mess Means for Life Science Jobs

Published: Jul 29, 2016

Brexit Schmexit—What this Mess Means For Life Science Jobs July 28, 2016
By Mark Terry, Breaking News Staff

On June 23, 2016, the U.K. voted to leave the European Union. Dubbed “Brexit,” for Britain Exit, the decision to exit won 52 percent to 48 percent. The European Union (EU), is an economic and political partnership of 28 European countries that began shortly after World War II. Nineteen of the member countries—the U.K. was not one of them—used a common currency, the euro.

As the BBC writes, the EU has “its own parliament and it now sets rules in a wide range of areas—including on the environment, transport, consumer rights and even things such as mobile phone charges.”

And now the U.K. has voted to leave. Although the effects of the exit will undoubtedly be wide-ranging in the short-term, what it’s creating currently is a huge amount of uncertainty.

The focus of this brief article is theoretically simple: For recent graduates, how does the Brexit affect life science jobs?

Life Science Markets

The stock market doesn’t like uncertainty, and the global stock market responded to the Brexit vote in a way that probably should have been expected—it lost almost $2 trillion overnight. Pounds sterling had a record one-day drop to a 31-year low. Most investors—most people in general—didn’t expect the “leave” voters to win.

Frankfurt’s market fell 7 percent, Paris dropped 8 percent. Italy and Spain’s reported one-day drops over more than 12 percent. And on and on.

Interestingly, life science companies, for the most part, were fairly stable. Most pharmaceutical companies’ sales and profits in the U.K. come from around the world, and that’s insulated the companies. Also, many of the big U.K. drugmakers, such as GlaxoSmithKline , report earnings in U.S. dollars, which as Bidnessetc noted, “means that with the fall of pound sterling in relation to the dollar, direct translation of their earnings into sterling would be favorable.”

Plus, people will continue to need medicine, so if the U.K. and other pharmaceutical companies are basically financially sound, they should weather the Brexit reasonably well.

There will be a lot of changes, though. Note, for instance, that the offices for the European Medicines Agency, the EU’s version of the Food and Drug Administration, is headquartered in London. It may have to move to Europe. And the U.K. may have to create its own drug agency.

And U.K. companies with trade agreements and offices in European countries will have to renegotiate contracts, which is probably a win for the attorneys and business negotiators.

And the timing is complex. As The New York Times wrote on June 26, “Once triggered, the formal process of leaving the European Union is supposed to take two years. But extricating the union’s second-biggest economy from 43 years of European Union legislation is a daunting task.”

Jobs and Younger People

This is undoubtedly complicated for U.K. workers who, as part of the EU, essentially had access to the job market of 28 countries. Megan Dunn, the outgoing president of the U.K.’s National Union of Students (NUS), told The Guardian on June 27, “If you want to work in Germany or France, you are able to work on the same terms as citizens there. This means you don’t need special visas. If we were to leave [as Britons subsequently did vote to do], it’s unlikely we would be able to work on the same terms. It’s possible you would need some kind of visa to work abroad and this would impact on your ability to acquire a job.”

The impact would likely include more paperwork, changes in taxation, and possible delays in employment due to the additional oversight and red tape that is likely, especially over the next several years while the nuts-and-bolts of the Brexit are worked through.

A recent survey by the Hay Group division of Korn Ferry (KFY) analyzed wages for 5.6 million entry-level positions in 17 countries. The results showed that Germany had the highest average new graduate salary at $53,619 with the U.S. ranking second at $48,270, followed by Australia ($47,397), Netherlands ($45,626) and the U.K. ($39,946). Of the 17 evaluated, the Russian Federation ranked lowest with average graduate salaries of $8,448. All values were reported in U.S. dollars for consistency.

What College Graduates Can Expect to Make in Their First Job*
United States
United Kingdom
Saudi Arabia
Czech Republic
Russian Federation

*Based on an analysis of 25 entry-level career titles across 17 nations.

It will be difficult to project entry-level U.K. job wages long-term at the moment because there are so many unknowns, but in the short-term, most economists think there’s nothing but trouble facing U.K. workers.

“Since we project that Brexit would lead to a decline in economic activity, we naturally expect that Brexit would lead to job loss too,” Catherine Banard, a professor in European Union law at the University of Cambridge told The Guardian. She projects a loss of 550,000 U.K. jobs by 2020 as a result of the referendum.

And will it affect jobs in the U.S.? Many politicians, naturally, say no. Rana Foroohar, writing for Time isn’t nearly so optimistic. “A Balkanized EU would be terrible for America in any number of ways—our export sector, which has played an outsized role in our nation’s post 2008 economic recovery, has suffered over the last few years from lackluster sales in a slow growth Europe, as well as being hurt by the dollar’s relative strength to a weaker euro. Brexit will only exacerbate those effects, with the pound now having tanked and the euro likely to fall against the dollar as well.”

Biopharma Stability

For all the gloom and doom, EU-based life science companies seem to be making efforts to reassure investors and the general public that they’re not making any drastic changes while they wait to see the details of the Brexit.

Germany-based Merck KgaA indicated it had no plans to cut its U.K. presence or its workforce there. The company also said it felt the political impact of Brexit will be more serious than the economic consequences.

It has been pointed out that one negative impact on pharmaceutical research will be U.K. researchers losing access to EU-backed grants. In addition, there are many immigrant researchers working in U.K.-based pharma companies who are there under EU migration laws. They and their companies are undoubtedly scrambling to understand the consequences.

AstraZeneca , based in London, indicated it “aims to safeguard competitiveness of the life sciences industry and speed of patient access to innovative medicines,” according to Reuters.

Swiss-based Roche told Reuters it was too early to fully understand the ramifications of the Brexit, but meanwhile, the “key priority is to ensure that U.K. environment continues to support scientific innovation and speedy access of innovative medicines for patients.”

A spokesperson for GlaxoSmithKline told BioSpace, “Although the EU Referendum result creates uncertainty and potentially complexity for us in the future, we do not currently anticipate a material adverse impact on the business, Group’s results or financial position. We will continue to operate as usual and will engage in the process ahead. We look forward to working closely with all relevant stakeholders. Our priority continues to be ensuring patient access to our medicines, vaccines and consumer products across the world.”

In fact, on July 27, GSK announced that it was investing $360 million in expanding or building three manufacturing facilities in the UK. They are in Banard Castle in County Durhamn, Montrose in Angus (Scotland), and Ware in Hertfordshire. This something of a display of confidence in the UK economy and its skilled workforce.

GSK’s chief executive officer, Andrew Witty, and AstraZeneca’s chief executive officer, Pascal Soriot, chair a task force implemented by the UK government to focus on regulatory and related issues that the pharmaceutical industry will face in light of the Brexit referendum vote.

The Button Hasn’t Been Pushed

To add to the uncertainty, there’s some question as to whether the Brexit is going to actually happen. It seems likely that it will—politicians willing to ignore the vote of 52 percent of the electorate in a democracy would be catastrophic. However, Article 50 of the Lisbon Treaty, which is what would need to be triggered for any member state to leave the EU, is still up in the air.

A July 11 story in The Independent reported that more than 1,000 attorneys signed a letter addressed to Prime Minister David Cameron indicating that the EU referendum may actually not be legally binding, but be “advisory.”

The lawyers further wrote that the U.K. government should set up an independent investigation to evaluate the costs and benefits of leaving before they actually make plans to exit. The letter outlines a plan that “reconciles the legal, constitutional and political issues” caused by the Brexit vote.

Although there has been talk of another referendum, this letter, carrying the weight of 1,000 members of the Bars of England and Wales, Scotland and Northern Ireland, would seem to have more legal clout than previous speculation on avoiding the Brexit. The letter states, in part, “The European Referendum Act does not make it legally binding. We believe that in order to trigger Article 50, there must first be primary legislation. It is of the utmost importance that the legislative process is informed by an objective understanding as to the benefits, costs and risks of triggering Article 50.”

It also points out that the referendum did not set a threshold, which is common in polls of national importance, for example, a two-thirds majority. And, because Scotland, Northern Ireland and Gibralter clearly did not vote to leave the EU, the matter becomes significantly more complicated.

Bottom Line

What does it mean for recent graduates interested in jobs in life science companies in the U.K. or Europe?

Extra uncertainty, for sure. Companies appear to be in a business-as-usual holding pattern while details emerge. On the other hand, the big pharma companies have strong fundamentals, the world still needs and buys medicines, and there will always be complications that need to be overcome. And if you’re on the legal or business negotiation side of biopharma, it looks like there will be plenty of jobs in the near and long-term future.

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