Photographer: Johan Jeppsson/Bloomberg

After Ericsson Shock, Sweden Looks to Brexit for Some Answers

  • Sweden puts itself forward as next home for EMA after London
  • Creating pharma hub expected to boost know-how and exports

As Sweden watches while Ericsson AB struggles with slumping demand, it looks like Britain’s exit from the European Union has the potential to soften the blow.

Because of Brexit, the U.K. will no longer be able to house a number of EU institutions. Sweden, among others, already has put in a bid to host the European Banking Authority, the region’s financial regulator. But it also wants to target the bloc’s pharmaceutical industry, according to Anders Loennberg, Sweden’s national coordinator for life science. That includes pitching to bring the European Medicines Agency to Sweden from London.

Getting the EMA is a “big possibility” and Sweden is one of the main candidates, Loennberg said in an interview.

AstraZeneca, Pfizer

Prime Minister Stefan Loefven put Loennberg in charge of bolstering Sweden’s life science industry. Johnson & Johnson, AstraZeneca Plc, GE Healthcare and Pfizer Inc. have recently increased investments in Sweden, with some even moving production to the Nordic country.

Loennberg says the industry has the potential to create thousands of jobs to support the economy. Becoming the EU’s pharma hub also brings with it other benefits that will affect Sweden’s hospitals and universities, he said. Though Loennberg tends to focus on the health benefits, he says having a bigger pharma industry will “show up in rising exports, in rising numbers of jobs, it should show up in the interest in Sweden as an investment country.”

Foreign Investment

About a quarter of the EMA’s medical evaluations for new pharmaceuticals in the EU already take place in Sweden, which is home to institutions such as Karolinska Institutet, known for its association with the Nobel Foundation on deciding the annual winner of the medicine prize.

Sweden is also home to the European Centre for Disease Prevention and Control.

Foreign investment in Sweden’s life-science industry jumped 10-fold last year to about 10 billion kronor ($1.14 billion), led by a 6 billion-krona investment by Johnson & Johnson in Alligator, a biotech firm that’s developing antibody-based pharmaceuticals for cancer treatment. Loennberg said that level of investment can probably be sustained.

Sweden is trying to identify growth industries as the country absorbs jobs losses at Ericsson. The phone-network maker is cutting about 3,000 jobs locally and last week issued a profit warning that sent its shares plunging 20 percent. The board is still looking for a permanent replacement for the chief executive officer it fired in July.

Creating Jobs

If the government is to live up to its goal of having the EU’s lowest unemployment rate by 2020, it can’t afford any more Ericsson-style shocks and needs to ensure the industries it has are able to grow and create jobs.

Loennberg says Sweden sees scope for pharma companies with their EU operations in London to relocate as they look for a way to maintain access to the single market after Brexit.

“We’ve had several large international companies that have said they’re prepared to support Sweden, because it needs to be in a country that supports industry and is advisory and not only controlling,” he said. “That’s very important for the industry.”

But it’s not just Brexit. Loennberg says concerns about safety and stability mean Sweden can also compete with emerging markets, despite higher labor costs. Such considerations mean Sweden is in some cases being considered an alternative to India, China and even the U.S.

“If you had asked me three years ago, I would have been convinced that production is gone, it’s India, China and Singapore,” Loennberg said. “But now it’s being moved back” to Sweden.

Before it's here, it's on the Bloomberg Terminal.
LEARN MORE