British pharmaceutical companies are weathering the turmoil of Brexit that has engrossed every other sector in the stock market. Big players such as AstraZeneca, GlaxoSmithKline, Shire and BTG actually enjoyed a slight rise in their share prices on the EU referendum results day while many of their blue-chip counterparts’ prices plunged.
The pharma industry is seen as defensive play that stakeholders flee to when markets are unstable. Even in times of economic uncertainty and political turmoil, people will always need life-saving drugs – this makes pharma a safe investment. This is particularly true for big companies like Glaxo and Astra where the large proportion of sales are generated overseas and largely in the US. The weaker pound will make their products more competitive and many mid and large-cap stocks have also become far cheaper for cash-rich foreign investors.
What does Brexit mean for pharmaceuticals?
“Britain leaving the EU will have implications for the way drugs are approved in the UK”, says Mr Thompson, Chief Executive of the Association of the British Pharmaceutical Industry. Preferably politicians would work for the UK to stay part of the European Medicines Agency (EMA), which approves drugs on behalf of its members. This would side-step companies needing to file for approval in the UK separately to the EU, which may cause companies to lose interest in doing business in the UK as the EU market is much larger.
Looking good for Pharma
Nevertheless GlaxoSmithKline signalled its confidence in the UK economy by announcing that it would pump more money into its factories at Barnard Castle in County Durham, Montrose in Scotland, and Ware in Hertfordshire, investing £275m and creating new jobs, as the pharmaceutical group insisted the country is still an attractive place to invest despite the Brexit vote.
In spite of whatever may happen in the UK economy, the pharmaceutical industry must remain a strong constant, and will as proven time and time again. In 2012, the pharmaceutical sector’s contribution to the balance of trade was the third greatest of nine major industrial sectors, up from fifth in 1975 and third in 1990. The pharmaceutical industry has, over the past decade, generated an ever-widening trade surplus (i.e. more exports and therefore money into the country than imports which means money out of the country), reaching a little over £2.8 billion in 2013.
Trade Expert at TransferMate, Tracy Moylan will be attending The Pharmacy Show in Birmingham on 25th – 26th September. If you are attending this event and would like to learn more about TransferMate and how we save businesses operating in the pharmaceutical industry thousands each year, contact Tracy on 0207 6599185 or email@example.com to arrange a meeting.