Max Nisen is a Bloomberg Gadfly columnist covering biotech, pharma and health care. He previously wrote about management and corporate strategy for Quartz and Business Insider.

Biotech and pharma are theoretically defensive stock sectors in times of turmoil -- people don't suddenly stop needing drugs, even in a financial crisis. 

Sure enough, on Day One of a possible Brexit-fueled European apocalypse, shares of U.K.-based GlaxoSmithKline, which benefits from a weak pound, actually rose in London trading. Johnson & Johnson, the safest of the safe, pharma-wise, fell only about 1 percent. 

But a closer look at the arguments in favor of buying drug stocks, already having rough year, is less comforting. 

Flight to Safety?
Health care has not been much of a defensive sector this year.
Source: Bloomberg

The actual sales impact of Brexit may be limited for pharma and biotech, at least compared to other industries. With a few exceptions, many drugmakers get the most significant part of their revenue from the U.S. The U.K. is only a small hunk of ex-U.S. revenue, and its patients pay substantially less for drugs than those in many other countries. The U.K. spends just 1 percent of GDP on prescription drugs. Biotechs tend to be particularly U.S.- focused.

Brexit Breakdown
Most biotech firms derive a substantial majority of their revenue from the U.S. FY 2015 figures sales figures by geography.
Source: Bloomberg

Bigger pharma firms aren't quite as concentrated in the U.S., but their most profitable drugs tend to get a disproportionate amount of sales there, and the U.K. isn't generally a massive market for them. Not all companies break out U.K sales. But AbbVie and Novartis do, and the U.K. accounted for just 3 and 2.6 percent of their 2015 sales, respectively.

Multinational Lite
Big pharma is much more dependent on the U.S. than Europe or the U.K. Percent of 2015 sales by geography.
Source: Bloomberg
*includes Middle East and North Africa AbbVie does not break out European revenue, but 59.3 percent of its sales were from the U.S.

But a broader, Brexit-triggered E.U. downturn would be more worrisome for big and small drugmakers. And firms that don't record profits in the rapidly shrinking pound will likely suffer nasty currency effects in the coming quarter. U.S. dollar strength has caused negative currency impacts in recent quarters. The Brexit vote means it will likely to get even stronger against the pound and the euro, both of which plunged on Friday.

More Dollars More Problems
Brexit is unlikely to be particularly fun (on the currency side) for any major pharma company that reports in dollars. Percent impact of currency on sales.
Bloomberg Intelligence

Beyond the near-term effects, Brexit is almost certainly bad for science: The U.K. is one of the biggest recipients of research funding from the E.U., and a ton of that money goes to biopharma research. 

The European equivalent of the FDA is currently headquartered in London; it'll probably have to move. That may make it more difficult and expensive to get drugs approved in the U.K. in the future. And there's likely to be general regulatory slowdown and upheaval throughout Europe. 

With drugmakers already under intense scrutiny for their pricing practices, any incremental bad news only adds to negative sentiment; investors don't seem in the mood to carefully judge them on their merits.

Yes, biotech and pharma are less exposed to Brexit than banking or London real estate. But "safe" is a stretch. 

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story:
Max Nisen in New York at

To contact the editor responsible for this story:
Mark Gongloff at