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Brexit? And the future of business

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1. And the future of business BREXIT? Mathew Shearman, Senior Account Manager at Ogilvy Healthworld James Stewart, Associate Director at Ogilvy Public Relations The EU…
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  • 1. And the future of business BREXIT? Mathew Shearman, Senior Account Manager at Ogilvy Healthworld James Stewart, Associate Director at Ogilvy Public Relations The EU referendum
  • 2. Worker conditions WHAT IS THE UK ACTUALLY VOTING ON? ECONOMIC UNION POLITICAL UNION SOCIAL CHAPTER Single market, not the Euro 28 member states
  • 3. Council of EU: 28 relevant ministers – 1 from each country Also review law EU Commission: 28 members 1 appointed by each country They initiate law They debate together EU Parliament: 751 elected MEPs – the UK has 73 Scrutinise and debate law Debate again No law Law is passed AGREE? AGREE? AGREE? no yes yes no no yes yes THE MAKING OF LAW IN THE EUROPEAN UNION
  • 4. 7 DAYS TO GO BGM; ComRes; ICM; Ipsos; MORI; Survaion; TNS; YouGov (polls of >900 adults only) 43% 42% 12% 58% 32% 9% 22% 60% 13% LEAVE REMAIN DON’T KNOW A GENERATIONAL DIVIDE 60 years + 18-24 years
  • 5. THE BREXIT PROCESS ARTICLE 50 24th June - Autumn 2016(?) RENEGOTIATION 2016-2018 Specific trade deals Contribution to EU budget NEW RELATIONSHIP ??
  • 6. BREXIT ON BUSINESS
  • 7. SINGLE MARKET The impact on the UK economy will depend on changes to access to the single market or new free trade deals. • THE SINGLE MARKET removes barriers to trade and investment within the European Union • THE EUROPEAN MARKET is declining and trade deals such with India may be more quickly formed • Different assumptions: • Anticipated drop in £, economic growth between 3% and 6% lower • Boost from regulatory burden – 1.6% GDP? • Maintain the single market with legal harmonisation and EU budget contribution?
  • 8. CURRENT TRADE RELATIONS The UK export locations (not including services):
  • 9. FOCUS ON LIFE SCIENCES A UK priority area
  • 10. A BASE FOR BRANDS IN LIFE SCIENCES
  • 11. A LIFE SCIENCES PERSPECTIVE EFPIA says that as part of the EU, UK pharmaceutical companies can continue to benefit from: EU Marketplace Pan-European R&D collaboration EU advocacy on global trade issues Harmonised regulatory environment
  • 12. LIFE SCIENCES IN THE UK The UK is a high exporter & importer of pharmaceuticals: $34.5 billion $34.7 billion EUUK
  • 13. 400 0 -400 -800 -1,200 -1,600 -2,000 2 0 -2 -4 -6 -8 -10 DRUG SPENDING DECLINE FORECASTED Following a projected dip in GDP, pharmaceutical sales to the NHS would decline: Figure 2: Change in forecast pharmaceutical sales, UK Change in pharma sales, Brexit scenario compared to baseline (£m); left scale % change vs non Brexit scenario; right scale Source: The Economist Intelligence Unit forecasts 2015 2016 2017 2018 2019 2020 259 -1,223 -1,707 -1,664 -3982016 Pharmaceutical sales: £18.7 bn
  • 14. THE SINGLE MARKETING AUTHORISATION The UK currently has a role on the Committee for Medicinal Products for Human Use (CHMP) For medical devices, the CE mark gives access to the UK market Pricing of treatments is a national responsibility – NICE plays a role on the European Network for HTA (EUnetHTA) Potential impact on domestic drug access and launch sequencing HARMONISED REGULATORY ENVIRONMENT
  • 15. CLINICAL TRIALS: FROM INVESTMENT TO ACCESS The UK is currently the top country for phase 1 trials, 2nd for phase 2 trials The UK receives the second highest financial contribution from Horizon 2020 – EU research funding EU public/private partnerships, such as the Innovative Medicines Initiative (IMI), ensure collaboration across borders Regulatory burden shift for companies with UK-specific protocol? PAN-EUROPEAN R&D COLLABORATION
  • 16. WHAT WILL HAPPEN AFTER THE REFERENDUM? And how should business respond?
  • 17. What will happen after brexit? NOBODY KNOWS
  • 18. BUT… WE CAN ASSUME There will be a period of TURBULENCE while the political and business environment come to terms with the result • The British financial markets will drop and the pound will fall in value • David Cameron will resign – Boris Johnson would be favourite to replace him • Significant pressure will grow for Scottish independence Britain will be forced to RENEGOTIATE its RELATIONSHIP WITH THE EU • Will the UK join the single market? Will the EU let the UK join? • How will the EU react to Britain negotiating trade deals having left? The British government will have to establish how it REPLACES ROLE the EU plays in the UK e.g. research fund like the Horizon 2020 There will be CHANGES to travel and working rights for EU CITIZENS in the UK
  • 19. HOW SHOULD BUSINESS RESPOND? Businesses will be UNDER PRESSURE to assess the IMPACT OF BREXIT and make business decisions on this information: • Vital to monitor the political environment immediately after the result Likely to be a spate of COMPANIES ANNOUNCING CHANGES TO BRITISH OPERATIONS: • Many listed companies will announce plans in Q2 reports • Narrative likely to develop about businesses / investment drying up Risk that companies seen to rush out will be subject to CUSTOMER/GOVERNMENTAL IMPACT Opportunities for CORPORATES TO INFLUENCE GOVERNMENT AGENDA/BREXIT NEGOTIATIONS if done carefully Don’t only worry about your British business – the EU WILL BE FACING ITS BIGGEST CRISIS YET
  • 20. BUT EVEN WITH A REMAIN VOTE THERE WILL STILL BE CHANGES The POLITICAL DYNAMICS in the UK will have CHANGED: • Conservative Party divisions • UKIP increasingly able to attract former Labour voters Britain will RESIST FURTHER EU CENTRALISATION and may VETO NEW MEMBERS JOINING Likely to be A REFERENDUM ON ANY FURTHER EU TREATIES
  • 21. WANT TO HEAR MORE ABOUT POLITICS IN BUSINESS? MATHEW SHEARMAN Senior Account Manager Ogilvy Healthworld mathew.shearman@ogilvy.com JAMES STEWART Associate Director Ogilvy Public Relations james.stewart@ogilvy.com
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