Information regarding the impact of Brexit on German companies

The terms of Brexit remain unclear. German companies, with their close economic ties to the United Kingdom (UK), should therefore be prepared for the possibility of a hard Brexit.

It is feared, for example, that there could be major disruptions to market access conditions. This would have a particularly strong impact on companies that have UK suppliers and/or customers and little to no experience in doing business with third countries. In order for such companies to not be disrupted in their research and development activities, for example, alternative suppliers of chemicals, materials and equipment within the EU may need to be sought. This outcome would also affect companies that, though familiar with the handling of third-country transactions, have to integrate the special terms of Brexit (still to be negotiated) into their business processes.

The value chains of manufacturers of pharmaceutical and medical products are highly integrated across Europe. Such products are regulated at European level by legal systems and arrangements between EU institutions, member states and national authorities. Brexit would subject the access and distribution of pharmaceutical and medical products to possible delays. With the withdrawal of the UK, the import regime for pharmaceutical products between the EU27 and the UK is likely to revert to WTO status. This would impose additional requirements on the import of pharmaceutical products into the EU27, such as special test procedures and approval by “qualified persons”. In addition, pharmaceutical products could be affected by customs requirements at several points in the value chain, which would result in further delays. It is true that the WTO Pharmaceutical Agreement contains rules governing tariffs for most pharmaceutical products. However, not all medical products are registered with or covered by these rules. In case of doubt, individual assessment is advisable. The duplication of regulatory processes for new or existing market approval may lead to delays and affect how quickly patients receive drugs. This must be avoided. In any event, permission for so-called “shared packs” can significantly facilitate distribution in the UK and the EU27.

If a company has received product approvals and certifications for the EU market from the UK, this could also affect the product’s CE marking. The European Commission warned of this in an official letter. If the UK leaves the EU in March 2019 without a withdrawal agreement, certificates issued by UK institutions will cease to be valid in the remaining 27 EU member states. Consequently, the affected products may no longer be placed on the EU market. With the withdrawal of the UK, British institutes would lose their status as “notified bodies” and would no longer be able to carry out the conformity assessments valid within the EU. The European Commission therefore recommends that potentially affected companies take steps now to ensure that they have valid certification for their products.

Companies whose products have been certified in the UK have two options: one option is to request a new conformity assessment from a certification institute (notified body) in one of the remaining member states; another option is to have the existing dossier transferred to another EU member state. This requires a contractual agreement between the company, the United Kingdom and the new notified body.