Japan Threatens UK Disinvestment Should EMA Move Overseas

September 9, 2016
Donald Macarthur

As Japan voices Brexit concerns, Donald Macarthur notes that Japanese pharma companies favored London as a European base well before the EMA opened its doors.

Concerns about a possible relocation of the European Medicines Agency (EMA) from London after the United Kingdom leaves the European Union have been voiced by the Japanese government. These concerns are contained in a blunt 15-page ‘Message to the UK and the EU’ covering the interests of the entire spectrum of Japanese industries in the country.

"Many Japanese pharmaceutical companies are operating in London, due to the EMA’s location in London", the release states. If the EMA was to transfer elsewhere, "the appeal of London as an environment for the development of pharmaceuticals would be lost, which could possibly lead to a shift in the flow of R&D funds and personnel to continental Europe". This could then "force Japanese companies to reconsider their business activities", it concludes.

Quite what advantage the companies believe comes from close physical proximity to the Agency is unsure. It is not as if you can just walk in off the street without an appointment to discuss an application or seek clarification on some regulatory point of detail. It may be the mere chance of picking up intelligence first hand is the draw. Not content with being in the same city, one Japanese major even gambled unsuccessfully on the EMA choosing west London’s Hammersmith district (one of the other short-listed sites in competition to Canary Wharf) when it based its own office there.  

In reality, many Japanese pharmaceutical companies favored London as a European base well before the EMA opened its doors in 1995. Today the scale and scope of their UK operations is much larger, but the main draw then as now was the English language, allied to the UK’s reputation for science, academia and innovation plus its re-eminence in service provision and information gathering/analysis. Understanding of what the EU meant with pharma was often very limited in Tokyo and Osaka during the early 1990s. I had to explain several times there wouldn’t be a single pricing and reimbursement regime, and even how to obtain official documents, for example.

What happens to the EMA will be a political decision. Until something is known on what form Brexit will take it seems more productive to focus on practical matters.

Relocation would certainly risk large financial penalties. The EMA only completed the move from three buildings in Westferry Circus to its current single, high-tech, customized Churchill Place site in the same Canary Wharf area in August 2014. It occupies nine floors, totaling 250,000 square feet, under the terms of a 25-year lease, apparently with no let-out clause.  EMA accounts reveal a steep increase in infrastructure costs, from EUR 31 million ($35 million) in 2012 to EUR 62 million in 2013 and EUR 55 million in 2014, ‘due to fitting out the new premises’. Resettlement and redundancy costs would be another burden. The EMA hasn’t even begun paying the rent of upwards of GBP 46.50 ($61.62)/sq ft yet either. The deal it negotiated with its new landlord included a 37 month rent-free period.  

But it is people that are critical to EMA’s success of course. It employees almost 900 staff from all 28 EU member states. English is the Agency’s working language but fluency in another EU tongue is also mandatory. Many will be settled in London with young families. Some may not relish a move to the likes of Denmark, Italy, Spain or Sweden (countries which have already expressed interest in hosting a relocated EMA) for personal, linguistic or cultural reasons. Yet the loss of skilled and experienced assessors, inspectors, administrators, support staff and translators would be a huge blow. The 2014 phased move within Canary Wharf appeared seamless with no disruption to the EMA’s workflow. Relocating overseas would be far more complex. Combined with the potential loss of experts from the UK’s Medicines and Healthcare products Regulatory Agency, which frequently acts both as rapporteur/co-rapporteur in the EU centralized procedure and as the reference member state in the decentralised procedure, would almost certainly jeopardize companies’ launch plans.

It is to everybody’s interests that the EMA stays where it is for the foreseeable future. We can only hope that common sense will prevail and some typical European compromise is realised to achieve this, whatever the politicians decide the big picture post-Brexit will be.   

Donald Macarthur (don.macarthur@btinternet.com) is an independent consultant.