With its global and highly regulated nature and highly complex supply chains, the Irish life sciences sector will face considerable challenges as a result of Brexit, regardless of the eventual outcome of the process.
The sector encompasses a vibrant pharmaceutical industry which is responsible for exports of almost €70 billion annually. In addition, it employs around 30,000 people directly and almost the same again indirectly. The medical devices sector employs a further 38,000 people and accounted for €12.6 billion in exports in 2016, making Ireland the second largest exporter of medtech products in Europe.
Irish-owned life sciences businesses include manufacturers, laboratory service providers, research operations, wholesalers and distributors, and Brexit presents a number of issues for them, most notably the probability of new customs barriers between the EU and the UK, and the impact of the UK’s departure from the EU regulatory system.
Know your supply chain
At a recent Brexit Stakeholder Event hosted by the Health Products Regulatory Authority (HPRA), more than 400 industry representatives were given a detailed briefing on the preparations being made to mitigate the impacts of Brexit and ensure continuity of supply of potentially life-saving medicines and medical devices to Irish patients.
Aoife Farrell, Health Products Distribution Manager with the HPRA, advised companies to ensure that they had detailed knowledge of their supply chains, and posed a number of questions. “I can’t stress enough the importance of mapping out your supply chain in detail – all the way from the raw materials needed to manufacture to the end product reaching the patient. Do you know where the active substance comes from; do you know how it gets here; does it transit the UK, or does it come from a UK manufacturing or storage facility; and what new regulatory and customs requirements do you need to be familiar with?”
From a regulatory point of view, when the UK becomes a third country products will have to be tested and certified at the point of import into the EU. The EU authorisation system for pharmaceutical products has a number of layers to it and these will have to be dealt with following Brexit. HPRA emphasised that it will work with stakeholders in managing their pathway to regulatory compliance in the event of a “no deal” Brexit.
The situation was eased somewhat for pharmaceutical exporters in January with the announcement by the UK Government that EU Community Marketing Authorisations will be converted to UK Marketing Authorisations following the UK’s departure from the EU.
The role for HPRA for medical devices is quite different as they do not authorise medical devices. These products are certified by more than 50 notified bodies across the EU. However, it is estimated that up to 40 per cent of medical device products sold in Europe are certified by UK bodies.
Niall MacAleenan, Head of the Medical Devices Department, HPRA, explained that the European Commission announced some time ago that certificates issued by UK bodies will become invalid in the event of no deal being reached on withdrawal. This requires Irish manufacturers to explore alternative certification arranges and distributors and importers to engage with their suppliers to encourage them to secure alternative certification, or to find alternative products which are certified by notified bodies within the EU-27.
A number of UK notified bodies are already making arrangements to establish a presence in the EU, and this will alleviate the situation for many Irish companies. Irish manufacturers which currently have their products certified by UK bodies may also have to make alternative arrangements in order to continue to export to EU markets.
Dealing with Customs
Regardless of the final complexion of any future relationship, once the UK leaves the EU and its Customs Union it will become a third country, and customs will be a mandatory requirement for goods passing between Ireland and the UK. While there are no specific requirements applying to medicines and medical devices, Aoife Farrell had a warning in relation to mixed loads.
“If your goods are being transported in a mixed load that also contains goods like food, some of which require a mandatory customs check, there will be delays,” she warned. “If your products are subject to a short shelf life, or require particular storage conditions, it would be wise to attempt to avoid this situation.”
She added that there are special customs procedures in place for goods originating in one EU country and transiting through the UK before arriving in Ireland. “The HPRA will not regard these products as having been exported to a third country and re-imported from it.”
Carol-Ann O’Keeffe, Assistant Principal with Revenue Corporate Affairs and Customs noted that goods destined from the UK, coming in from the UK, or transiting through it will require customs declarations. “These declarations are submitted electronically and processed in milliseconds. We carry out a risk analysis and that guides us as to which consignments are checked. In general, the vast majority will be green routed with no check. At present, the reality is that 92 per cent of goods coming in from third countries are green routed.”
Key steps for exporters
And she had some advice for exporters. “If you are selling goods into the UK, you will need to supply certain key data in advance. These include the tariff codes for the products; the origin of the products; the consigner; the consignee; and the value. The UK is in the process of passing new legislation requiring customs formalities for imports to the UK to be completed before goods can even be loaded onto the ship. You will need to make sure that your customer has all the information needed in order to complete the formalities; otherwise, the shipment cannot go ahead.”
She advised companies with doubts in relation to customs arrangements post-Brexit to use the online customs training module available from Enterprise Ireland. “That’s a really valuable tool to access,” she added.