Dive Brief:

• UK drug manufacturer GlaxoSmithKline is "drawing up contingency plans" in face of Britain's decision to leave the European Union, Financial Times reported last week.
• The manner in which the UK splits from the EU could affect the drug maker's ability to access new staff, though optimism remains strong at present. No plan has yet been enacted.
• However, GlaxoSmithKline CEO Sir Andrew Witty noted the Brexit had also led to some positive short-term effects. A weak sterling decreased operating costs, delivering a "tailwind of 15% to sales and 27% to core EPS," Witty said during the third-quarter earnings release call.

Dive Insight:

The United Kingdom's vote to exit the European Union last June threatened to disrupt supply chains in the long-run by de facto reinstating labor and capital restrictions to businesses, like GSK, based in the Kingdom but with major sales and operations outside the country. 

Meanwhile, major businesses are preparing for the effects by meeting with government representatives to ensure as little disruption as possible when the moment comes. Mainly, the British government has yet to invoke Article 50 as it attempts to secure its priorities while negotiating with the European Union as to what controls will be reinstated, and what benefits will be kept.

During the call, GlaxoSmithKline CEO Sir Andrew Witty noted there was "good government dialogue" around the issue, and that the company has been assured pharmaceuticals are one of the "top three industries that Britain wants to swing behind." 

The company's Q3 results also revealed the importance of supply chain management to the company. The company offset its strong gains with investments in its pipeline, Respiratory portfolio, and for improvements on the supply chain. Mainly, the company sought to improve Bexsero capacity to 10 million doses (up from 2.5 million "two or three years ago"), while other drugs were directly impacted by other company's supply issues (Boostrix) or agility (Infanrix/Pediarix). Brexit-induced supply chain issues for the company could therefore be a boost to its competitors. 

How pharmaceutical companies continue to react to the Brexit will prove a case study to the importance of trade and government controls across supply chains.