Germany’s new healthcare reform initiative has already caused two global pharmaceutical companies to scale back their investment plans in the country. Now, another pharmaceutical giant is reportedly reconsidering its view of investing in the company.
According to reports, Pfizer CEO Albert Bourla expressed his dissatisfaction with the German government’s policy proposals in a letter to Chancellor Friedrich Merz. News of the letter was first reported by the German newspaper Handelsblatt.
Bourla argued in the letter that the policy reforms called into question the “predictability” needed for long-term pharmaceutical investments, Reuters reported.
“As a result, we are reviewing the timing, scope and future priorities of our external engagements and certain planned investments in Germany,” Bourla wrote, according to Reuters.
Pfizer did not immediately respond to Fierce Pharma’s request for comment.
Germany’s proposed healthcare reform plan is expected to save 16.3 billion euros ($19.08 billion) in 2027, and 1.9 billion euros ($2.2 billion) next year, particularly through cuts in drug spending.
Pharmaceutical companies will have to pay German health insurance companies the reduction in the list price of their products, among other measures aimed at lowering drug prices. Germany has historically been one of the first countries in Europe to launch new drugs, with rapid reimbursement support supporting early market entry.
The plan was announced in draft legislation in April and was called out by Novartis CEO Basu Narasimhan a few weeks ago.
“We have been a major investor in Germany for decades, and more broadly the pharmaceutical industry is one of Europe’s largest employers and sources of innovation,” Narasimhan told reporters on a conference call in late April. “Such policies would send the wrong signal to highly innovative industries like ours, where the United States and China are actively investing in the biotech ecosystem to improve their competitiveness.”
Other companies are now similarly opposing changes to their planned investments. Eli Lilly will cut its planned investment of 2.3 billion euros ($2.7 billion) in half, while German drugmaker Boehringer Ingelheim will cut domestic spending by 900 million euros ($1 billion), Handelsblatt first reported last week.
Boehringer’s decision also speaks to the concerns Bourla mentioned. Last week, a company spokesperson cited “increasing economic uncertainty and lack of investment predictability in the German pharmaceutical sector” in a statement to Fiers.
Lilly CEO David Rix confirmed to Handelsblatt that the company has already invested more than €1 billion in the Alzey, Germany-based manufacturing facility, which is scheduled to open next year. The company now plans to reduce on-site production capacity and hire approximately 500 employees instead of the planned 1,000. The additional funding will instead go to new facilities in the U.S. or to a facility currently under construction in Pennsylvania.
“Germany will fall to the bottom of the European market in terms of supporting our industry,” Rix told newspaper Handelsblatt.
A Lilly spokesperson told Fiers at the time that the country’s reform efforts could “significantly undermine business predictability.”
A Lilly spokesperson added: “Decisions on whether to install the remaining capacity and make Alzey the location we originally envisioned are on hold until the federal government restores the stable and predictable economic framework necessary for a long-term investment of this size.”
Meanwhile, Roche continues to invest €600 million ($692.88 million) in a planned diagnostic production facility in Penzberg, Germany. However, a company spokesperson told Fierce Medtech on June 9 that “we need to carefully evaluate future investment opportunities in Germany in light of the evolving policy framework,” noting a “new level of uncertainty regarding future investment, research and manufacturing decisions in Germany.”
The pressure on Germany mirrors similar developments in Britain last year, when a handful of big drug companies scaled back their expansion plans in the country. Earlier this year, the UK struck a deal with the US that would exempt medicines exported to the US from tariffs in exchange for adjusting the standards by which Britain assesses the value of new medicines.
In a company statement to Fierce, a Boehringer Ingelheim spokesperson added that “the political and regulatory landscape surrounding pharmaceutical research, production and marketing in many countries is undergoing significant changes,” pointing to a “deteriorating European environment.”
“At the same time, the expected further burden on the industry from the proposed savings package under Germany’s statutory health insurance framework sends the wrong signal,” the spokesperson said.
