Life Sciences

Brexit’s Effect on Procurement within the Life Sciences industry

The uncertainty of Brexit has been hovering over us since the decision was made for Britain to leave the European Union back in 2016.

With the negotiations set to take place and a deal finalised by the end of January 2020, companies across the board have spent millions of pounds on contingency planning – from stockpiling goods to office closures and relocation – in preparation for the worst case scenario.

Any altercations and subsequent consequences experienced within the Life Sciences industry, as a result of Brexit, will cause difficulties for both the consumers and the industry – particularly if procurement process alterations have not been considered and strategies amended in preparation. As such, businesses and manufacturers have been focusing on research into sourcing raw materials from further afield, as well as strategising to ensure that tariffs, regulations, and warehouse challenges cause the least impact upon the industry as possible.

A variety of distinguished corporations from AstraZeneca to Sanofi have begun increasing their stock supply in Europe, setting aside six weeks worth of inventory, and halting manufacturing investments in response. The logistics of stockpiling is complex within the Life Science industry, specifically with regards to the shelf-life of medicine and increased refrigeration costs.

Additionally, the abundance of stockpiled items has created the added issue of renting warehouse space, further increasing costs. As such, a multitude of companies within the EU are looking for alternative, more locally sourced suppliers. Naturally, this will in turn affect labour within both the original and new sourcing countries, as well as the final product to a certain extent as a result of quality and material changes.

On the opposite end of the spectrum, a significant amount of businesses are looking towards moving their offices and headquarters abroad. Companies are migrating to Amsterdam, Luxembourg, and Germany to head up their operations within the EU – most notably, the European Medicines Agency relocating from London to Amsterdam.

Furthermore, the sourcing of products and materials from the UK to the EU, and vice versa, is likely to be subject to customs declarations or tariffs. As a consequence, delays will occur at various points across the supply chain – from logistics and storage of materials to distribution of the final product. Six new port routes have been created to ship medicine to and from the EU to mitigate the effects of this change. Further delays will occur during the distribution stage of products, as a result of the rigorous testing and batch stages – all of which must be accounted for when coming up with contingency plans.

The aforementioned points have been focusing primarily on precautionary measures for the companies, but how will Brexit affect candidates in the EU? Fewer EU nationals are coming to the UK, and current UK residents from the EU may wish to move back to their home countries.

When it comes to recruiting from within the EU, hiring managers would benefit from predicting jobs and working with firms – like Proco Global – ahead of time to ensure that the best candidates are not being missed. The aim here would be to create a pipeline of the top talent, looking into methods of attracting and meeting with candidates, even if an internal role is yet to have been designed.

Unfortunately, the turbulence and uncertainty surrounding the impact on Brexit makes it difficult to forecast how procurement will be affected and to what extent. Candidates and hiring managers alike must then look towards how they can best prepare for the severity of the worst case scenario. It is now left in the hands of a handful of people to decide on, and negotiate, the outcome.

Brexit is likely to affect different categories within procurement at different rates and in different ways. The different skills that are sought for in raw materials for example, differs widely from those working in professional services. For instance, within financial services or marketing, the trade and supplier alterations are less likely to cause implications, in comparison to the effect upon third party outsourcing, raw materials, construction, and logistics.

Of course, this is merely a projection of what could happen – we are still not entirely sure of the outcome before a cemented negotiation has been agreed upon. Therefore, I invite companies to join in on this discussion – how has Brexit impacted your talent pool within procurement? Additionally, how is your company planning to adjust current procurement strategies to overcome the uncertainty?

Reference(s):
Bloomberg | Brexit Impact Tracker
Tungsten Network | The Pharma Supply Chain preparing for challenges
The Guardian | Brexit contingency plans for pharmaceutical industry

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