German pharmacies are increasingly reliant on medications produced in China, including essential items like painkillers, antibiotics, and diabetes treatments. A recent report by the pharmaceutical association Pro Generika e.V. highlights that a staggering 76 percent of all active ingredients in antibiotics imported into Germany originate from China.
Even medications manufactured in other countries, such as India or the United States, often utilize components sourced from China. The diabetes medication Metformin exemplifies this reliance, with 15 of the 22 leading global manufacturers situated in India, while two are based in China and three in Europe. Notably, 80 percent of Germany’s supply of dicyandiamide, a critical compound for Metformin production, is sourced from China.
Economic factors driving dependency
The competitive landscape shaped by discount agreements negotiated by German health insurance companies compels manufacturers to produce medications at the lowest possible cost, frequently leading them to offshore production where labor and regulatory costs are lower.
Generic drugs, which have expired patent protection allowing for open production, represent 90 percent of the medications deemed critical in the European Union. These drugs benefit from lower manufacturing costs in places like China and India, where labor expenses are reduced and environmental regulations are less stringent.
“Cheap production abroad was the result of a ‘cheap is cool’ mentality,” said Michael Müller, a professor of pharmaceutical and medicinal chemistry at the University of Freiburg.
He further elaborated on the challenges of repatriating production to Germany, stating, “The idea that factories could be brought back to Germany is political wishful thinking. The costs would be enormous and we lack the skilled labour.” Müller emphasized that even with rebuilt facilities, Germany would still rely heavily on imported raw materials from China.
Implications of supply chain vulnerabilities
The economic relationship between Germany and China is significant, with Germany exporting nearly €4.1 billion worth of pharmaceuticals to China in 2024, while imports of active pharmaceutical ingredients and drugs from China reached €722 million. However, the trade balance appears deceptive; Germany shipped over 15 million tonnes of pharmaceutical products to China, whereas imports from China surpassed 33 million tonnes.
Concerns over supply shortages have escalated as the Federal Union of German Associations of Pharmacists reported that around 500 prescription medications have become difficult to access, particularly antibiotics for children and treatments for ADHD and asthma.
“Germany used to be the pharmacy of the world, now the pharmacy of the world is in China or India. And if factories there have production problems, this is immediately reflected in the supply in Europe and Germany,” stated Thomas Preis, President of the Federal Union of German Pharmacists’ Associations.
The potential for economic leverage by China has not gone unnoticed, raising alarms among economists and industry experts that China could restrict medication supplies. This concern echoes previous instances, such as the tariff disputes during Donald Trump’s presidency, where China imposed export restrictions on rare earth materials.
However, Müller expressed skepticism about a worst-case scenario impacting pharmacy shelves in Germany, suggesting, “In an emergency, Germany would rather open its wallet and buy expensive medicines.” This sentiment was echoed during the COVID-19 pandemic when the interconnected nature of the global medicines market became evident.
To mitigate long-term dependency on foreign production, Müller advocates for Germany to enhance its focus on innovation, particularly in the development of new medications and manufacturing techniques. “The global network is not an enemy, but our opportunity, if we use it wisely,” he concluded.