BERLIN, Jan. 14 (Xinhua) -- Parts of Germany's health and life sciences industry, led by research-driven pharmaceutical companies, have continued to hire, invest, and expand, even as the broader manufacturing economy struggles to regain momentum.
However, this export-oriented sector, despite its counter-trend growth, is facing mounting pressures, including a wave of patent expirations for top-selling drugs and higher tariffs imposed by the United States.
RESILIENT POCKET
German and international companies continue to treat the country as a credible base for research, clinical development and manufacturing in health and life sciences sector.
One of the main reasons is structural. Germany's dense ecosystem of universities, university hospitals and applied research institutes produces a steady flow of early-stage science that can be channeled into start-ups, joint labs and industrial partnerships.
Germany's BioNTech, which traces its origins to academic work in Johannes Gutenberg University Mainz and later gained global visibility through mRNA technologies, is frequently cited as an example of how that pipeline can be commercialized.
Demand for innovative medicines globally remains another supportive backdrop. For example, Bayer, the German multinational pharmaceutical and biotechnology company, has pointed to growth from newer products in categories such as oncology and cardiovascular diseases as a partial offset to revenue erosion from expiring exclusivity.
German media reported that despite weak sentiment in the broader manufacturing sector, multinationals such as Eli Lilly have continued recruiting in Germany and committing billions of euros to new production facilities. By the end of 2024, employment in the sector reached about 133,000, up roughly 11 percent over five years.
PATENT CLIFF
While investment and employment figures remain robust, the pharmaceutical industry is also facing a series of structural pressures.
The business newspaper Handelsblatt has noted that many top-selling medicines are approaching the end of their patent protection. Patents grant pharmaceutical companies the exclusive right to market a drug for a limited period. Once that protection expires, competing manufacturers can launch generic or biosimilar alternatives, typically at significantly lower prices.
According to analyses by the Boston Consulting Group, by 2030, drugs with an estimated annual revenue of nearly 400 billion U.S. dollars will lose their patent protection.
For patients, patent expiration is clearly beneficial: once market exclusivity ends, competing versions typically drive prices down. For originator companies, however, it necessitates a constant reset, compelling them to replenish pipelines and adapt to renewed competition.
Stefan Oelrich, head of Bayer's pharmaceuticals division, has been working to overcome this "patent gap." He said that companies must continuously renew their portfolios and plan decades ahead, noting that "there is hardly any other industry that has to look as far into the future as the pharmaceutical industry."
TARIFF THREATS
Another major fault line is geopolitical, since the United States is both a crucial sales market for German pharmaceuticals and an increasingly unpredictable policy variable.
According to the Association of Research-Based Pharmaceutical Companies (VFA), the United States is one of the German pharmaceutical industry's most important export markets, accounting for around 25 percent of drug exports.
Since returning to office, President Donald Trump has imposed higher tariffs on most medicines imported from the European Union.
VFA has warned that the tariff decision would deal a significant blow to Germany and the broader European pharmaceutical industry. The tariff measures "saddle Germany's pharmaceutical industry with billions in additional burdens," said Han Steutel, president of the VFA.
Beyond tariffs, Handelsblatt cited a separate pressure point from the United States: pricing. It has said that the Trump administration wants the U.S. to stop disproportionately funding global drug development, and expects Europe to pay higher drug prices to compensate. This is particularly hard to implement in Germany, where drug prices are strictly regulated.
That limits manufacturers' ability to raise effective prices and can make the German market less attractive for global pharmaceutical companies in terms of commercial returns. The result, Handelsblatt said, could be later launches, or no launches at all, for some new medicines.
"It has rarely been so difficult to assess which and how many new drugs will actually be available in Germany in 2026," Steutel said.
