The German government aims to encourage the pharmaceutical industry to relocate the development and production of medicines back to Germany. However, it overlooks a self-imposed obstacle that could prove costly for everyone.
The growing demand for pharmaceuticals in Germany
Germany needs the pharmaceutical industry. In an aging society, the demand for medications is steadily increasing. Currently, one in three people aged between 75 and 80 takes more than eight prescribed medications. The revenue of the German pharmaceutical market has more than doubled from €25.3 billion in 2016 to €59.8 billion in 2023.
Does the pharmaceutical industry need Germany?
With nearly 100 percent of the population covered by health insurance and the significant purchasing power of the people, Germany is an extremely attractive market. However, the profit margins are even higher when therapeutics are produced inexpensively abroad. The days when Germany could boast of being the “pharmacy of the world” are over—India and China have long since taken over that title.
The impact of dependence on imports
The consequences of this dependence on imports of essential active ingredients and medications were evident during and after the COVID-19 pandemic. Supply shortages of antibiotics, antihypertensives, painkillers, and fever syrups for children unsettled the population. At the end of 2023, the Federal Institute for Drugs and Medical Devices (BfArM) reported supply shortages for a total of 514 prescription medications.
Future projections: Medications becoming unaffordable
Pharmaceutical companies are typically publicly traded and their stakeholders prioritize profits over saving the world. This makes it seem somewhat naive when science journalist Harald Lesch, in the “Terra X” episode “The Power of Pharma Giants” (available in the ZDF media library), asks at the beginning whether the pharmaceutical industry is focused on healing or profit.
Rising costs of patented medications
It is worth taking a closer look, particularly at the prices charged by pharmaceutical companies for patented medicines. Since 2013, the costs for medications during the exclusivity period, when the formulation cannot yet be produced as generics, have almost doubled. If this trend continues, by 2050, a quarter of the gross domestic product would need to be spent on such medications. Who will be able to afford that?
The argument for high costs
The pharmaceutical industry argues that the research and testing of new active ingredients and medications are expensive, and they need to recoup these costs before generics drive prices down. However, the actual development costs are not disclosed by the pharmaceutical giants.
Karl Lauterbach’s optimization plan
In 2023, the German government adopted a “National Pharmaceutical Strategy,” which can be seen as a bow to the pharmaceutical industry. This strategy not only promises state support for the development of active ingredients and medicines but also subsidizes the transfer of academic research results to companies. However, the strategy does not require pharmaceutical companies to lower drug prices in return.
Harald Lesch visits Federal Health Minister Karl Lauterbach, who succinctly summarizes his support for the pharmaceutical industry: “We are reducing bureaucracy.” Yet, even the SPD politician provides a bleak diagnosis of the health market: “too little research, very high prices, poor life expectancy, too little prevention.” He is working to optimize this, but he does not reveal how he plans to achieve it by the next federal election.
Environmental laws and their unintended consequences
Lauterbach might want to watch Harald Lesch’s “Terra X” documentary. In it, renowned pharmacist and chemist Ulrike Holzgrabe describes the hope of bringing pharmaceutical production back to Germany as “relatively naive.” Most medications, as well as a large part of the necessary raw materials, come from Asia because “we have environmental regulations that simply do not allow the production of these chemicals.”
Environmental and health crises abroad
Meanwhile, in countries like India, pharmaceutical production wastewater massively contaminates water bodies with antibiotics. This creates a training ground for bacteria to develop resistance to these substances. The World Health Organization (WHO) already warns of an approaching global health crisis due to dwindling defenses against multi-resistant bacterial strains.
Market realities and future challenges
New antibiotics are hardly being developed, as they would need to be reserved as a last resort rather than brought to market. Thus, the pharmaceutical industry finds it more profitable to invest in weight-loss injections or cancer vaccines. The “National Pharmaceutical Strategy” will not change these market dynamics. Harald Lesch’s conclusion at the end of the documentary is appropriately sobering: “It remains complicated.” His best advice: “Stay healthy.”
