“Maximum change scenario”: The biotech company’s Brexit business diary

In the second of our inside stories from British businesses, the regional manager of a biotechnology firm tells us how his company is preparing for every eventuality. 

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Illumina is a multinational business that manufactures technologies for gene sequencing. Its underlying technology was originally the invention of two Cambridge University professors at a company called Solexa – they developed a new, faster and cheaper method of reading our DNA. The company now has 19 offices across the world.

At its EU headquarters in Cambridge, regional tax manager for Europe Daniel John gives Peter Rory Hall an insight into how the biotechnology firm is preparing for Brexit.

23 June 2016: Britain votes to leave the EU​

This company employs over 500 people in Cambridge, which hosts its EU headquarters, and the technology it produces is a crucial part of the medical and biotechnology industry – sold to NHS hospitals, the UK government’s 100,000 Genomes Project and companies like 23andMe, which sells home DNA testing kits.

In under 24 hours, their instruments can give diagnostic tests, probabilities of suffering from a certain disease in the future and predictions of the effectiveness of medicines. As a result, since Brexit became a prospect, the company has undertaken detailed planning to ensure it’ll have enough products and chemicals to keep producing technology if Britain leaves the EU without a deal.

Summer 2018: Theresa May negotiates her deal with the EU

When it came to preparing for Brexit, Daniel John tells me that, in the summer of 2018, his former boss asked him to help establish a Brexit mitigation response – examining the effect Brexit could have on the company, how to mitigate any risks, and identify solutions in advance.

The company prepped for the “maximum change scenario” – a no-deal Brexit – and assessed how crashing out could affect regulation, the company’s supply chain and its employees.

Illumina contracted one of the big four external consultancy firms to analyse its strategy and interview its 20 teams to “tease out any areas they might have missed, and put together a report” for them, John says.

December 2018: The Home Office's settled status scheme is accessible to some EU citizens

Just over 30 per cent of the company’s UK workforce are EU nationals. Illumina have held workshops and hired lawyers to advise staff and help them through the implications of Brexit. The company’s HR team committed to paying the application fee for settled status and pre-settled status (pre-settled status allows you to stay in the UK for five years post approval, while settled status allows permanent residency in the UK), before the fee was later cancelled.

Illumina also examined the granular implications of Brexit. “If we end up with a no-deal Brexit, what are the flights going to be like the next day?” John asks. The company’s European market – including its UK operations – has long relied on products that come from a distribution centre in the Netherlands. This presented a major risk. If goods were grounded at EU customs, they would get written off, as products need to be kept at freezing temperatures.

January 2019: May’s fight to get her deal through parliament ahead of 29 March begins

In the build-up to the original March deadline, Illumina stockpiled products in its Cambridge building.

Illumina wanted to hold four to six weeks worth of supplies for their growing number of clinical customers like 23andMe and Genomics England, so they established a facility in the Cambridge building to hold goods. As a medical device firm, they signed up to the government’s notorious Brexit ferry contract intended to fast-track goods flowing into the UK.

While the stockpiling of chemicals and sequencing reagents took place, John says that, as “they were growing quickly” and had “one distribution centre for the whole of the EMEA”, they decided they required additional “distribution centres in Europe so they can supply their customers more quickly”.

As a no-deal Brexit threatens UK import rather than export supply chains, Brexit was an additional factor for pushing the company to create a new full third-party logistics centre in the UK.

April 2019: Brexit is delayed

For a short period after the Brexit delay, to use up the stockpiled goods, “all EU customers received shipments from Cambridge” rather than the Netherlands.

Today

Illumina is now using the same plan as in March, and has already begun communicating with customers about its plans for different Brexit outcomes. If John wakes up to a no-deal Brexit on 1 November, he plans to “check [Illumina's] systems, check the people in the logistics department” and “make sure they have communication with customers”.

Peter Rory Hall completed a work experience placement at the New Statesman.

> This piece is from our Know Your No Deal series on the different ways a no-deal Brexit will impact the UK