The signing of an agreement on the terms of a future trade relationship between Japan and the UK has been welcomed by the UK pharma industry, which counts Japan as its third largest export destination. However, with the Japanese government having previously expressed concern about uncertainties arising from the Brexit process and with some Japanese pharmacos already following the EMA out of the UK, it remains to be seen exactly how the two countries’ relationship will look post-January 2021.
The Association of the British Pharmaceutical Industry (ABPI) welcomed the news of the trade deal, noting that it would allow Japanese pharma companies already implanted in the UK to continue trading largely as they currently do after the end of the Brexit transition period on 31 December 2020.
As part of the Free Trade Agreement (FTA) struck between the two nations, the UK and Japan will incorporate the functions of the existing EU/Japan Mutual Recognition Agreement (MRA) for medicines and both sides will continue to accept each other’s drug safety testing and inspections before export. This MRA aims to avoids unnecessary duplication, disruption to supply chains or delays to patient access to medicine.
Additional relevant measures for the pharmaceutical industry contained in the FTA include improved mobility for businesspeople, securing more flexibility for Japanese and British companies to move talent into each country and covering a range of UK skilled workers to enter Japan. The UK government claims that these commitments go beyond the existing EU-Japan deal for investors, spouses and dependents, cover a wider range of intra-company transfers, and include a clear, transparent, and fast visa application process. Moreover, British businesses will benefit from tariff-free trade on 99 percent of exports.
Speaking in response to the details of the deal, Claire Machin, the ABPI’s head of international policy noted that, “The UK-Japan agreement provides much-needed continuity to businesses in our sector as they focus on preparations for the end of the transition period. These early deals are an opportunity for the Government to set out a future trade agenda which supports innovative British industries, encourages R&D investment and strengthens the UK’s role as a leader in life sciences. We look forward to working with them to achieve that in future agreements.”
Securing a continued positive relationship with Japan and Japanese companies has been identified as an important aim for the UK’s life sciences industry given that 3.3 percent (GBP 0.76 billion) of the UK’s GBP 23.3 billion-worth of pharma exports in 2019 went to Japan, making pharmaceutical products the third-highest good in value terms exported from the UK to Japan.
Back in 2016, the Japanese Ministry of Foreign Affairs issued a warning to the UK that uncertainties around Brexit, particularly the relocation of the European Medicines Agency (EMA) – which now sits in Amsterdam, the Netherlands – risked endangering Japanese R&D investment in the UK.
This trend is already in motion with Japanese firm Shionogi’s decision to relocate its European headquarters from London to the Netherlands last year. UK pharma is hoping that this new deal will bring back a modicum of certainty for Japanese companies and secure the two countries’ trading relationship in the longer term.