The "Invisible Dependency" on Medicine — The Day the EU is Held by China: Can the EU Establish "Pharmaceutical Security"?

1. What is Happening

In the European pharmaceutical supply chain, dependency on China is quietly but steadily deepening. A new study for the German generics association Pro Generika indicates that this dependency is not only limited to major active pharmaceutical ingredients (APIs) for generics but is even higher for precursor chemicals like alkaloids. The study warns that geopolitical tensions and export controls could disrupt supply. Researchers from IW Cologne (J. Kirchhoff) and the Healthcare Supply Chain Institute (D. Francas) provide examples such as metformin, analyzing that "the further upstream you go, the stronger the dependency becomes."aktiencheck.de

2. Changing "Quality" of Dependency: From Generics to Biologics

The study also touches on the rise of China's innovation capabilities, moving beyond the traditional understanding of being a "receptacle for imitation." In fact, while Europe is still considered to have a manufacturing advantage in biosimilars (generic versions of biologic drugs), the Asian share has risen to 30% since 2010, steadily eroding Europe's dominance.Institut der deutschen Wirtschaft (IW)

3. Numbers Speak of Risk: Which Drugs Are at Risk?

According to IW Cologne and European media reports, dependency is particularly noticeable in "foundation drugs" such as antibiotics, painkillers, and diabetes medications. One analysis highlights that for a significant number of key active ingredients, the reliance on China is extremely high, making alternatives difficult in case of supply disruptions. Practically speaking, short-term alternatives are almost impossible if export restrictions and logistical shocks coincide.Institut der deutschen Wirtschaft (IW)

4. Shock Already a Reality: Chronic Shortages and Production Withdrawal

Since the pandemic, "medicine shortages" have become chronic in Europe. The European Court of Auditors (ECA) pointed out in its 2025 report that drug shortages have been elevated to a constant threat to national health systems. Furthermore, the decision by Xellia, the last major European manufacturer of antibiotic APIs, to close its Copenhagen plant and shift some production to China symbolizes how price-focused procurement is undermining the sustainability of domestic manufacturing.European Court of Auditors

5. Policy Counterattack: EU "Critical Medicines Act"

In March 2025, the European Commission proposed the "Critical Medicines Act (CMA)." The act aims to promote domestic manufacturing and diversified procurement by mandating stockpiling of essential medicines, visualizing supply chains, and introducing evaluation metrics beyond price in bidding processes. This is against the backdrop of the reality that over 80% of antibiotic APIs have been sourced from Asia. Additionally, the strategic report issued by the Critical Medicines Alliance (CMA Alliance), established in 2024, laid the groundwork for future legislation.Public Health

6. The Remaining "Gravity of Price"

Reshoring comes with costs. The Commission urges a review of price-centric bidding practices, but national health budgets are limited, and procurement officers tend to be drawn to "cheapness." In fact, companies warn that "without adequate compensation and subsidies, factories cannot be maintained." This is not merely an industrial policy. Sustainable pricing is the "premium" for supply stability.Reuters

7. Social Media Reactions: Five "Voices"

• Healthcare media on the ground: Calls to "stop price-centric practices and promote European production and joint stockpiling" are prominent.X (formerly Twitter)

• Supply chain practitioners: Practical proposals such as "First, diversification. Next, inventory and visibility. Finally, redesign of pricing systems."X (formerly Twitter)

• Biosimilar stakeholders: "The Asian share is rising. Urgent investment is needed to maintain the current advantage."X (formerly Twitter)

• General users: Voices calling for strengthening stockpiles of "critical medicines" due to shortage fears coexist with cautious opinions on excessive decoupling.X (formerly Twitter)

• Policy watchers: Many believe the effectiveness of the bill depends on "bidding design and funding."Reuters

8. Practical Checklist for Companies and Governments (Immediate Response Version)

1. Multi-sourcing: Diversify geopolitical risks by stratifying APIs, intermediates, and precursors. In addition to China risks, include India and Southeast Asia.

2. Inventory and Contracts: Redesign safety stock for critical medicines (demand × lead time × safety factor). Clearly define cost pass-through with long-term fixed prices + variable clauses.

3. Visibility: Expand the Bill of Materials (BoM) to Tier 2/3 precursors and document the location of raw material companies, export control history, and ESG sanction risks.

4. Bidding Reform: Weight not only price but also supply redundancy, domestic production ratio, and environmental and quality audit scores. Align with the spirit of CMA.Public Health

5. Joint Stockpiling and Mutual Lending: Build national and regional stock pools to level out peak demand. Aligns with ECA recommendations.European Court of Auditors

9. Implications for Japan and Globally

Globally, Europe's reshoring could impact international prices and excess capacity of raw materials and intermediates. For Japanese companies, adapting to changes in EU bidding requirements (redundancy, traceability, stock obligations) will be key to competitiveness in the European market.Public Health

10. Conclusion: From Price to "Resilience"

"Cheapness" is a friend to patients, but "cheapness alone" becomes an enemy of healthcare. Europe's dependency on China is the result of years of price-centric focus, and solving it requires transparent cost-sharing and institutional design. The CMA is just the first step. Pharmaceutical security is not merely industrial protection but infrastructure development to safeguard patients' rights to continuous treatment.aktiencheck.de