Europe's Dramatic Decline in Pharmaceutical Production Threatens Health Sovereignty
Tuesday, December 30, 2025
Europe's pharmaceutical industry is undergoing a dramatic deindustrialization, with production shifting to Asia and now accelerating towards the US, posing severe risks to the continent's health sovereignty. Major players like Novo Nordisk, Sanofi, and GSK have warned the European Commission of an impending investment exodus unless urgent measures are taken to restore competitiveness.
The decline stems from decades of cost-cutting strategies, where European labs relocated manufacturing to China and India for cheaper labor and laxer regulations. Europe's share of active pharmaceutical ingredient (API) production by value has plummeted from over 80% in the late 1990s to around 30% today, with China at 35% and India at 20%. This fragmentation has left Europe dependent on Asian suppliers for 80% of APIs in consumed medicines, including critical antibiotics like doxycycline, clarithromycin, and cefaclor, which now have only one or two European manufacturers left.
US President Donald Trump's aggressive industrial policy has exacerbated the issue. By threatening tariffs, he has prompted over $500 billion in announced investments from pharma giants in the US. Companies such as AbbVie, Gilead, Bristol Myers Squibb, Amgen, Lilly, and Pfizer derive 60-75% of revenues from the US market, making repatriation attractive. Even leaders like Johnson & Johnson (57%), Novo Nordisk (57%), GSK (52%), Sanofi (49%), Roche (48%), and Novartis (42%) are heavily US-reliant.
Innovative medicines, Europe's remaining stronghold due to complex processes beyond Asian generics capabilities, are now targeted by US expansions. China is also advancing into this space with heavy R&D investments, clinical trials, and Western partnerships, trapping Europe between superpowers. Pharma CEOs, in a letter to Ursula von der Leyen, urged action to prevent further decline, demanding higher medicine prices and a unified EU strategy. However, budget-constrained governments resist price hikes, stalling progress.
This crisis underscores vulnerabilities exposed by COVID-19 and geopolitical tensions. While generics dominate 70% of prescriptions, innovative drugs drive profits, yet Europe's appeal wanes without policy shifts. French industry leader Vincent Touraille of SICOS highlights the ongoing slide. To reclaim sovereignty, Europe must incentivize local manufacturing, diversify procurement, and boost R&D. Failure risks not just economic loss but public health threats from supply disruptions. Strategic investments in biotech infrastructure, regulatory harmonization, and workforce skills are essential. Partnerships with EU states could foster 'strategic projects' for critical medicines, mirroring calls from bodies like EFPIA. Ultimately, balancing cost controls with industry viability will define Europe's pharma future amid global competition.
The implications extend to supply chain resilience, with calls for diversified sourcing and EU-wide coordination. Recent events like the Ukraine war amplified shortages, prompting legislative pushes like the Critical Medicines Act. Yet, without decisive action, AstraZeneca's CEO warns the industry could shrink to a shadow in 15 years. Stakeholders must prioritize evidence-based policies targeting real risks, ensuring Europe remains a hub for innovation and production. This requires public-private collaboration, funding for modernization, and a competitive environment that attracts capital back from rivals.
