Brexit advocates are backing away from heady projections that leaving the EU could be a boon to the U.K.'s healthcare budget, and that heightens medical researchers' concerns. With big money at stake, what could Brexit mean to England's desire to become a global medical research hub? Analyst Kristine Harjes and contributor Todd Campbell consider the implications of Brexit on EU research funding in this clip from The Motley Fool's Industry Focus: Healthcare podcast.
A transcript follows the video.
This podcast was recorded on June 29, 2016.
Kristine Harjes: Let's take it and rewind a little bit and go back to research. This is the last element of this story that I want to touch on. I think it's actually the most interesting.
The U.K. is a research hub. They either receive a ton of funding from larger EU research projects. They actually receive more research money than they give to these funds. About 16% of the 4 billion U.K. life-sciences money that they spend on research annually comes from these EU grants. There's this huge question and concern now within the research industry. What's going to happen to that money?
Todd Campbell: EU member countries can participate in something called Horizon 2020. Horizon 2020 is a major research initiative worth 80 billion euros from over a 10-year period that runs through 2020. Last fall alone they came out and said that we're going to spend, or invest, 16 billion euros in research throughout the EU. That's a ton of money that is now put in jeopardy by the decision to Brexit.
It's going to be very interesting for Glaxo, and AstraZeneca, and companies that are located over in the U.K. that obviously have very deep ties to the universities doing research there to see what happens to those plans to turn, again, London into this big innovation hub for medicine.
Harjes: I saw a couple of really interesting quotes from some leaders of the industry, particularly on the research side and the science side. Stephen Hawking said that Brexit would be a disaster for U.K. science. That is not a good sign right there.
However, I will also read one more quote. This is from Steve Bates. He's the CEO of the Bioindustry Association, which is a British life-sciences trade organization. He says, at first he goes: "The future structure of medicine regulation in Europe is now thrown into question." He goes on. This is a really Foolish point of view right here, but he just says, "We've just got to keep on and carry on bioteching," which is just such a lovely British way of putting that.
He's right. This will all be a gradual shift over the next two plus years. There's really no set date that the British government is going to invoke this Article 50, which would trigger the entire process of negotiation. It is something that, as always, we want to have a long-term mindset about.