Businesses in the UK being forced to stockpile products because of the uncertainty over a ‘no deal’ Brexit are paying a heavy price.
By Robbie Toan
Before the EU referendum took place on June 23rd 2016, a lot of people didn’t quite foresee the wider implications of leaving the European Union. On the one hand, the majority of people that I’ve spoken to about Brexit were aware of how leaving the EU would arguably impact the routine aspects of day-to-day life; from the free movement of labour across Europe and trade with other European countries to agriculture and fishing laws, and regulations that are in place relating to climate change.
However, as a looming ‘no deal’ Brexit seems to becoming a reality rather than a possibility, we can now see more clearly how both industry and everyday life will be negatively affected by the UK leaving the European Union.
Businesses need assurance and certainty, something that politicians on both sides of the negotiating table are arguably failing to give. As the director of an online pharmacy based in the UK, I have already had to futureproof the business to combat potential hurdles caused by Brexit.
As a withdrawal agreement hadn’t been settled by the so-called divorce date in October, it was widely reported that patient-customer facing medical organisations were advised to stockpile medication because of the possible disruption on the Calais to Dover route, thereby affecting the supply chain of drugs.
The NHS, for instance, has reportedly stockpiled an extra six weeks supply of vital blood products and medications in case of shortages due to import delays. After hearing about the NHS’s approach, and reading widely around the possible delays in imports, we decided to stockpiled three times the normal amount of medication we’d normally have.
To ensure we have an adequate supply (and space to store it all), we’ve had to unwantedly dig into cash reserves. Fortunately, as we’re quite a profitable business, we haven’t had to take out any loans. However, this has made us become concerned about cash flow, and our shareholders have had their dividends cut significantly also.
We’re not alone with this problem either. I’m fully aware that the majority of companies who provide a similar service have been hit hard financially by preparing for the worst case scenario of border delays.
In the absence of any credible government guidance on the true implications of a ‘no deal’, you could be forgiven for speculating whether these precautionary measures have been induced by the media hype surrounding general uncertainty post-Brexit. However, when nationally-funded institutions like the NHS are preparing for “all situations”, we should take this as a sign that things may get significantly worse.
It is obviously not just the pharmaceutical industry being impacted by this rush to prepare for a ‘no deal’ scenario. I also own a car dealership based in Northern Ireland and, while Brexit shouldn’t in theory affect our company, we’ve decided to take our own precautions. Taking the opposite approach to the pharmacy, we have reserved a large amount of capital while simultaneously reducing stock. This is mostly down to the fact that we want to firstly see the effects of Brexit on the market and subsequently, used car prices.
All this talk of preparation due to uncertainty leads me back to my initial point about the impacts of Brexit occurring beneath the surface, obscured to many of the people who voted Leave.
Yes, some Brexiteers might get what they want regarding migration, or they can now reside in a country that doesn’t have to abide by EU laws that Brussels put in place. But in reality, being part of the EU was much more than the freedom of movement or the specific price that British farmers have to sell their milk for. EU membership simplified a complex set of agreements that keep industries moving smoothly, irrespective of the individual pros and cons of said agreements.
In the long term, I am concerned about the overall health impacts of Brexit. It’s a well-known fact that income and health are closely linked, and as soon as the results came in when Britain decided to leave the EU, we could see why Brexit could be a pain for the economy.
The pound fell immediately, and to this date it’s declined by 12% against the Euro, and 5% against the US Dollar. The volatility of the economy could affect health issues like obesity and smoking, let alone the accessibility of medication that can help to treat various medical conditions.
The best case scenario for UK business is that things carry on as they are. However, even if a deal is agreed in the short space of time remaining, Brexit could prove to be an expensive and disruptive headache not only for us but the British population as whole.
Robbie Toan is the Operations Director at Assured Pharmacy.
Opinions expressed in View articles are solely those of the authors.