Why the Brexit is No Killing Blow for Pharmaceuticals

Brexit and Pharmaceuticals Why the Brexit is No Killing Blow for Pharmaceuticals - But a Serious Challenge...

04.07.2016Editor: Dominik Stephan

Britain’s decision to exit the European Union will have a ‘limited’ impact on India’s pharma industry, ratings agency ICRA recently said. “The European markets account for 10–13 per cent of the total revenues with US being the largest export destination.

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New Delhi/India – Accordingly, the impact of GBP and Euro depreciation is likely to be limited,” Senior VP, Co-head Corporate Sector ratings, ICRA Ltd, Subrata Ray said in a statement. However, given the fact the profitability in the European business has been low vis-a-vis other markets on account of price cuts and shift towards tender market, currency depreciation and any possibility of further austerity measures may impact the attractiveness of the market, he added.

India’s total pharma exports in 2015–16 were $13 billion. Of these, EU accounted for $1.51 billion, UK ($469 million) and the US ($5.02 billion). As for its overall exports to the EU and Britain, they stood at $35.35 billion and $9.35 billion respectively in 2015–16. They were at $40.28 billion to the US. The UK voted to leave the European Union after 43 years in a historic referendum. Leave won by 52 per cent to 48 per cent votes. The vote—which saw an extremely high turnout of around 72 per cent—reverses the public verdict back in 1975, when the UK voted to remain a member of then European Economic Community, which later became the EU.

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Great Britain is an important trading partner and one of the biggest markets in the EU for the German chemical-pharmaceutical industry. Precisely 7.3 percent of exports of chemical products go there.

British investors have invested well over 2 billion euros in German chemistry. Direct investments on the island by German companies amount to 1.6 billion euros. In the event of a Brexit, a reduction in the stock of FD Is is likely on both sides of the Channel.

In the three years after an exit, how would Brexit affect your industry's employment levels?

Forecasted losses in UK total exports by main EU market in a post brexit scenario as of 2015 (in billion GBP)

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No industry would be hit harder by a possible Brexit than chemicals and pharmaceuticals, analysts believe.

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