Sanofi Has Been Stockpiling Drugs for No-Deal Brexit for Six Months -- Update
August 01 2018 - 8:46AM
Dow Jones News
By Donato Paolo Mancini
French pharmaceuticals company Sanofi SA has been making
drug-shortage contingency plans for more than a year to prepare for
the U.K. failing to reach a deal with the European Union on Brexit,
according to a person familiar with the matter.
The move is the latest sign large European companies are worried
about the prospects of a hard Brexit, where the U.K. doesn't reach
a deal over its future relationship with the European Union,
despite repeated attempts at reassurance from British government
officials.
A no-deal scenario is expected to result in wide-scale
disruption in the U.K.'s import of products from the Continent, and
vice versa.
Food, medicine and transport could be affected if no transition
period is agreed upon, and jointly agreed regulation would no
longer apply. While it has been a possibility since the U.K. voted
to leave the EU in 2016, a no-deal scenario has only recently
become a more plausible option as talks between the bloc and the
U.K. have stalled.
Sanofi isn't the only pharmaceutical company making contingency
plans. Swiss drug maker Novartis AG told The Wall Street Journal on
Wednesday that it too was planning to hold increased inventories in
the event that the U.K. and EU don't reach a deal before the
departure. AstraZeneca PLC said in recent weeks that it had
increased its stockpile by about a month to protect itself from a
disorderly Brexit.
Sanofi, which generated global sales of about EUR35 billion
($40.9 billion) in 2017, of which EUR850 million were in the U.K.,
is one of the Continent's largest insulin and vaccine
producers.
The company's Brexit-related preparations began about a year
ago, the person said, adding that its U.K. division began building
its stocks about six months after. Stocks have been increased for
all therapeutic areas by about four weeks to a total of 14, the
person said, excluding medicines that are in constant shortage. The
stock for vaccines has also been increased where possible.
Stockpiling is the accumulation of drugs beyond levels that a
company would otherwise deem necessary.
Quality control, for which Sanofi sends batches of medicine back
to the Continent from its two plants in the U.K., would no longer
be possible in the case of a hard Brexit. The person added that
some staff reductions to its 1,800-strong workforce in the U.K.
would become necessary.
There hasn't been any guidance from the U.K. government in terms
of what would be possible or even feasible in case of a no-deal
departure from the EU, the person said.
Sanofi follows in the footsteps of other major pharma players
like AstraZeneca PLC, which said earlier this month that it had
increased its stockpile by about a month to protect itself from a
disorderly Brexit. The increase, however, represented only a small
portion of its total manufacturing.
A hard Brexit would affect far more than one industry. The EU
has warned that air licenses issued in the U.K. and the EU could no
longer be valid for travel in each other's territories. Legal
arrangements that regulate road travel also would no longer
apply.
A Sanofi spokesman confirmed stockpiling was taking place in the
U.K. in preparation of a no-deal Brexit but declined to comment
further. He also said the company continued to closely monitor the
evolving tariff situation between the EU and the U.S.
(END) Dow Jones Newswires
August 01, 2018 08:31 ET (12:31 GMT)
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