eu referendum: brexit and the implications for brands
TRANSCRIPT
Brexit? And the future of business Mathew Shearman, Senior Account Manager at Ogilvy Healthworld James Stewart, Associate Director at Ogilvy Public Relations
THE EU REFERENDUM
Thursday 16th June 2016
Associate Director Ogilvy Public Relations
James Stewart Mathew Shearman Senior Account Manager
Ogilvy Healthworld
WHAT IS THE UK ACTUALLY VOTING ON?
ECONOMIC UNION Single market, not the Euro
POLITICAL UNION 28 member states
SOCIAL CHAPTER Worker conditions
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
STATE OF THE CAMPAIGN
KEY CAMPAIGN ISSUES: • Immigration
• Economy
CAMPAIGNS TRENDS: • Conservative Party division
• Labour are (relatively) united, but are Labour voters?
• Young people want to remain, but will they vote?
A TURBULENT UK/EU RELATIONSHIP
1st Jan 1973 2004 1975
1989 2013
23rd June 2016
1992
7 DAYS TO GO
Graph: http://whatukthinks.org/eu/opinion-polls/poll-of-polls/ (accessed 15/06/16)
48% 52%
A GENERATIONAL DIVIDE
60 years + 18-24 years
Graph: http://www.economist.com/blogs/graphicdetail/2016/05/britain-s-eu-referendum (accessed 15/06/16)
THE BREXIT PROCESS
ARTICLE 50 24th June - Autumn
2016(?)
RENEGOTIATION 2016-2018
Specific trade deals
Contribution to EU budget
NEW RELATIONSHIP ??
BREXIT ON BUSINESS
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?
CURRENT TRADE RELATIONS
FOCUS ON LIFE SCIENCES A UK priority area
A BASE FOR BRANDS IN LIFE SCIENCES
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
LIFE SCIENCES IN THE UK The UK is a high exporter & importer of pharmaceuticals:
$34.5 billion
$34.7 billion EU UK
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
-398 2016 Pharmaceutical sales: £18.7 bn
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
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
WHAT WILL HAPPEN AFTER THE REFERENDUM? And how should business respond?
What will happen after brexit?
NOBODY KNOWS
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
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
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
THANK YOU For further information, please contact:
Mathew Shearman [email protected]
James Stewart [email protected]