The U.K.'s largest drugmakers, GlaxoSmithKline PLC and AstraZeneca PLC are leading the industry's preparations for a so-called "no deal" Brexit — an increasingly likely outcome whereby the U.K. exits the EU without a withdrawal deal in place — by stockpiling medicines and spending a minimum of £120 million to secure supplies.

Brentford, England-based GSK said it has set aside £70 million to implement changes required for Brexit and has increased inventory in the U.K. and in Europe, without disclosing specific levels in a move mirrored by other large suppliers of medicines in Britain including Novo Nordisk A/S and Sanofi.

Denmark's Novo Nordisk, the biggest supplier of insulin for type 1 diabetes in the U.K., said it is now stocking 16 weeks of insulin, a medicine which helps to control blood sugar levels and has to be taken daily by people with the condition. Sanofi, France's biggest pharmaceutical company, has expanded its inventory of drugs to 14 weeks of ready supply versus 10 weeks prior to Brexit.

With 45 million packs of medicines moving from the U.K. to the EU every month and 37 million packs entering Britain from Europe, the U.K. BioIndustry Association said Brexit poses significant risks to all involved in the life sciences sector.

"A 'no deal' Brexit would mean the biggest disintegration of the complex regulated medicines market across Europe in terms of regulation, cross-border movement of goods, comparative pricing and intellectual property," said Steve Bates, CEO of the BioIndustry Association.

"The life sciences sector knows that it is patients who are at the end of their supply chains," Bates said, adding that the industry has been preparing for Brexit for two years.

Cambridge, England-based AstraZeneca said it has spent between £40 million and £50 million on increasing stock as well as coordinating changes to licenses and to thousands of packaging materials. The Anglo-Swedish drugs group also said it has duplicated batch testing release, which is the process of confirming every batch of medicine has the correct composition through laboratory tests, in Sweden. The company has also taken steps to safeguard against short-term border friction.

Patient safety in focus

"Our focus is on safeguarding access and supply of medicines to patients," CFO Marc Dunoyer told reporters at the group's annual results press conference. "The U.K. government has confirmed it will accept EU tested medicines in the event of a no-deal."

In a letter to pharmaceutical companies on Dec. 7, 2018, U.K. Health Secretary Matt Hancock reminded the pharmaceutical industry that an additional six weeks of medical supplies should be allowed for on top of existing stocks. He said that the government was working to ensure that there is sufficient roll-on, roll-off freight capacity to enable medicines to continue to move freely into the U.K.

"The government has also agreed that medicines and medical products will be prioritized on these alternative routes to ensure that the flow of all these products will continue unimpeded after 29 March 2019," Hancock wrote.

In its annual report, GSK made an additional cost proviso of £50 million a year due to Brexit, citing subsequent customs duties and duplicate testing of its products. The company cautioned that this estimate could rise or fall depending on the emergence of further details of how businesses will need to change.

"Obviously right now is a period that’s pretty difficult and rather uncertain, and we would all like to get to certainty as soon as possible," CEO Emma Walmsley said on a conference call with reporters Dec. 19, 2018. "For GSK, what we are focused on in terms of Brexit, whatever the scenario may be, is securing the supply of the vaccines and medicines and consumer products that people need."

"We have been working on that for some time with the government and we are very confident we can be ready in all scenarios for that," she said.