GSK Sees £70 million Short-term Brexit Cost

Britain’s largest pharmaceutical producer GlaxoSmithKline (GSK) has estimated that its costs related to Brexit, the country’s leaving the EU, could run as high as £70 million over the next two to three years.

Subsequent ongoing additional costs of about £50 million per year, including additional customs duties and transaction or administration costs, could also be expected, the company said. Longer term, no significant material impact on business is likely, CEO Emma Walmsley wrote in the company’s annual report.

Walmsley said management in January began taking account of the impact Brexit could have on the supply chain and quality oversight, in particular with an eye to maintaining continuity of its supply of medicines, vaccines and health products to patients and consumers in the UK and the EU.

With uncertainty remaining about the future relationship between the UK and the EU, the CEO noted that GSK is working on expanding its ability to conduct re-testing and certification of medicines in the EU and the UK. This means transferring marketing authorizations registered in the UK to an EU entity, along with updating packaging and packaging leaflet, amending manufacturing and importation licenses and securing additional warehousing.

“Delivering these necessary but complex changes by March 2019 will be ambitious and potentially disruptive in the short term and we support efforts to secure a status quo transition period to minimize disruption,” Walmsley added.

Other global drugmakers also have been doing their Brexit homework, with Anglo-Swedish to AstraZeneca flagging potential trade and regulatory hurdles that may create new financial burdens, but none has come up with an overall cost figure, reports suggest.

Last December, Johnson & Johnson calculated that it could face as many as 50,000 additional product tests annually at a cost of around £1 million if there is no mutual recognition of testing between the UK and the EU. Germany’s Merck KGaA said post-Brexit tariffs could add “significant costs.”