State Aid - Brexit Roadblock Or New Opportunities?

• Published date: 16 October 2020
• Subject Matter: Government, Public Sector, Food, Drugs, Healthcare, Life Sciences, Constitutional & Administrative Law, Biotechnology & Nanotechnology
• Law Firm: Veale Wasbrough Vizards
• Author: Stephanie Rickard

Many in the pharma and life sciences sector have expressed concern over the seemingly low prospects of a trading deal between the EU and UK after the end of the Brexit transition period on 31 December 2020...

... including no mutual recognition agreement to recognise each other's standards and testing. The two major sticking points in the negotiations have been State aid laws and fisheries. However, is there an upside for pharma and life sciences businesses?

Supporting the Life Science Sector

As the UK economy looks to recover from coronavirus (COVID-19), the UK Government has signalled a desire to have greater flexibility to protect jobs and to support new and emerging industries now and into the future, particularly in the innovation sectors. Clearly the life sciences sector has an important role to play in helping the UK tackle and recover from coronavirus.

One of the ways the Government hopes to achieve this is through the reform of State aid laws. As the life science sector is one of the beneficiaries of the current State aid regime receiving favourable tax credits, grant funding and exemptions for research and development, understanding the future of State aid will be important to the sector.

What Is State Aid?

The EU State aid rules restrict the ability of a member state to subsidise its own companies to ensure a level playing field across Europe. For example, the EU Commission has previously investigated a rebate scheme by the German government to provide financial support to its pharmaceutical industry in response to complaints from other member states, although the scheme was subsequently found to be lawful and granted an exemption.

Revoking State Aid Laws

As from the beginning of next year, the...