Germany’s new healthcare reform initiative has already led two global drugmakers to slice their planned investments in the country. Now, another pharma major is reportedly reassessing how it views investments there.
Pfizer CEO Albert Bourla has shared his qualms about the German government’s policy proposals in a letter to Chancellor Friedrich Merz, according to reports. German newspaper Handelsblatt was the first to report the news of the letter.
Bourla argued in the letter that the policy reforms put the “predictability” required for long-term pharma investments in question, Reuters reports.
"As a result, we are reviewing our external engagements as well as the timing, scope, and future prioritization of certain planned investments in Germany," Bourla wrote, according to Reuters.
Pfizer did not immediately respond to Fierce Pharma's request for comment.
The proposed healthcare reform plan in Germany looks to save 16.3 billion euros ($19.08 billion) in 2027, with cuts in drug spending specifically meant to generate 1.9 billion euros ($2.2 billion) in savings next year.
Drugmakers would have to pay an increased markdown on their products’ list prices to German health insurers, among other measures intended to bring down drug prices. Germany is historically one of the first European countries new drugs launch in, due to its quick reimbursement turnaround supporting faster market entry.
The plan, which was unveiled in April as a draft bill, was called out weeks ago by Novartis’ CEO Vas Narasimhan.
“We’ve been large investors in Germany for decades and I would say more broadly, the pharmaceutical industry is one of the largest employers and sources of innovation in Europe,” Narasimhan told reporters during a late-April conference call. “Policies like this send the wrong signal to a high innovation industry like ours, where we see U.S. and China actively investing in the biotech ecosystem to make it highly competitive.”
Now, other companies are pushing back, as well, with changes to their planned investments. Eli Lilly is set to cut its planned investment of 2.3 billion euros ($2.7 billion) in half, while German drugmaker Boehringer Ingelheim is slashing its 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, in a statement to Fierce, a company spokesperson cited “growing economic uncertainty and lack of investment predictability in the pharmaceutical sector in Germany.”
Lilly’s CEO David Ricks confirmed to Handelsblatt that it has already spent more than 1 billion euros on an Alzey, Germany-based manufacturing facility that’s set to open its doors next year. The company now expects to reduce its capacity at the site and employ some 500 workers there as opposed to the planned 1,000. The extra funding will instead go to a new U.S. facility or one currently under construction in Pennsylvania.
“Germany will fall to last place among European markets in terms of supporting our industry,” Ricks told Handelsblatt.
A Lilly spokesperson told Fierce at the time that the reform effort in the country could “significantly undermine predictability for business.”
“The decision on whether to install the remaining capacity—and make Alzey the site we originally envisioned—is on hold until the Federal Government restores the stable, predictable economic framework that a long-term investment of this size requires,” the Lilly spokesperson added.
Roche, meanwhile, is continuing on with its 600 million euro ($692.88 million) investment for its upcoming diagnostic production site in Penzberg, Germany. However, the company “will need to carefully assess future investment opportunities in Germany in light of the evolving policy framework,” a spokesperson told Fierce Medtech on June 9, pointing to “a new level of uncertainty regarding future investment, research, and manufacturing decisions in Germany.”
The pressure on Germany echoes a similar storyline in the U.K. last year, when a handful of major drugmakers reduced their planned expansions in the country. Earlier this year, the U.K. struck a deal with the U.S., which will free it from tariffs on pharmaceutical products exported to America in exchange for the U.K. adjusting the thresholds under which it assesses the value of new drugs.
“Across many countries, the political and regulatory landscape for pharmaceutical research, production and marketing is shifting significantly,” Boehringer Ingelheim's spokesperson added in the company's statement to Fierce, pointing to a “deterioration in the European environment.”
“At the same time, the anticipated additional burdens on the industry from the proposed savings package under the German statutory healthcare insurance framework are sending the wrong signal,” the spokesperson noted.