The German pharmaceutical industry expects significant declines this year after the boom in corona vaccines. While the economy is likely to grow slightly overall, sales in the pharmaceutical industry will fall by around 5 percent, according to a new forecast by the Association of Research-Based Drug Manufacturers (VFA), which is available to the German Press Agency.
Production is also likely to shrink by 1.7 percent. “This is forcing companies to rationalize,” it said. This is already visible in reduced investment plans. For comparison: In 2022, according to the VFA, sales increased by 6.3 percent and production by 5.3 percent.
The association, which represents 47 drug manufacturers with 94,000 employees in Germany, estimates that the downward pressure this year will have significant consequences for employment in the industry. “The upward trend in the number of employees in recent years will not continue. Around half of the companies have already developed staff reduction plans or are currently developing rationalization plans,” said VFA President Han Steutel.
“Politics are required”
The pharmaceutical industry is struggling with increased costs for energy and inputs from the chemical industry and a cooling business with corona vaccines. The coup by the Mainz-based manufacturer Biontech, which launched the world’s first approved corona vaccine from Germany, had given the pharmaceutical location a new shine and created a special boom for the industry. But as the pandemic subsides, vaccine demand falls and the market normalizes.
In addition, the industry sees itself under pressure because of regulation. Health Minister Karl Lauterbach (SPD) has increased the manufacturer discounts that drug manufacturers have to grant to statutory health insurance companies for this year. This is intended to limit spending in the healthcare system. According to the VFA, the tightened discounts alone cost the industry 1.5 billion euros, plus additional billions in costs, for example in the course of extended price moratoriums for medicines.
The fact that there are still new hires is the result of strategic company decisions in recent years and thus long-term plans to increase the workforce, said VFA chief economist Claus Michelsen. That shouldn’t hide the fact that the changed environment is having significant negative effects. “Politicians are called upon to change this as quickly as possible.” It is conceivable that pharmaceutical companies could part with unprofitable production parts due to cost pressure.
