Amid tensions over government healthcare cost-cutting policies, Roche has slammed the brakes on new investments in Germany, joining an expanding group of drugmakers pulling back from the European country.
Speaking with the German newspaper Die Welt, Daniel Steiners, head of Roche Germany, said that the company has “put all future investment decisions in Germany on hold for the time being,” according to Reuters.
Roche paused future investments in Germany this summer, a Roche spokesperson told Fierce, pointing to a report in August by the Financial Times.
Steiners blamed the country’s recent healthcare reform plan that intends to cut drug prices further, asserting that the move has “recently destroyed a lot of trust.”
The controversy centers on legislative measures designed to cap statutory health insurance spending by enforcing deeper discounts on branded medicines. A previously proposed variable rebate mechanism was scrapped following heavy industry criticism, but a higher fixed rebate, from 7% to 15.5%, will be installed in 2027.
According to Roche, Berlin’s reliance on quick-fix budget cuts rather than structural healthcare reform places an unfair burden on the biopharma industry and sends a negative signal to companies seeking to invest in Germany.
Germany has announced plans to introduce a site-exemption clause that would allow companies to reduce or waive the additional rebate if they meet certain national footprint and investment criteria. Steiners argued that the term only partially offset the negative effects of the legislation, and that Germany needs a more comprehensive strategy, according to Reuters.
The exemption clause “represents the final opportunity to restore confidence in Germany as a competitive and reliable investment location,” the Roche spokesperson said. “However, such a clause will only be credible if it forms part of a broader economic policy agenda that rewards innovation, provides predictable framework conditions for investment and restores Germany's international competitiveness.”
The spokesperson noted that the proposal is advancing but has yet to become law.
Roche has created more than 1,800 new jobs in Germany since 2020 and invested approximately 3.8 billion euros, the spokesperson pointed out. Among the Swiss pharma’s existing investments in Germany is a 600 million euro commitment for a diagnostic facility in Penzberg. The company told Fierce in June that it would not withdraw that investment amid controversies over Germany’s new drug pricing rules.
The spokesperson did not respond to Fierce’s question about whether the paused investment decisions encompass R&D, such as new clinical trials and business development for new innovations.
Germany, long regarded as a premier location for European life sciences R&D, manufacturing and commercialization, is facing dwindling investment from the biopharma industry.
Domestic drugmaker BioNTech is shutting down three local facilities, putting 1,800 jobs at risk, although that decision is more related to the company’s own post-pandemic right-sizing than the government’s health policy.
Meanwhile, GSK is closing a legacy egg-based flu vaccines manufacturing site in Dresden, citing dwindling demand. But the British pharma’s choosing another Canadian site over the German site for the same function is telling.
In pullbacks directly attributed to the tightening policy environment, Eli Lilly earlier this year decided to halve its planned 2.3 billion-euro investment in Germany, while German company Boehringer Ingelheim cut its domestic spending by 900 million euros.
Around the same time, Pfizer CEO Albert Bourla said his company was also reassessing its investments in Germany, suggesting that the policy reforms call into question the market’s predictability required for long-term pharma investments.
Novartis CEO Vas Narasimhan has also expressed deep disappointment over the cost-cutting measures, calling them “a significant setback to rewarding innovation in Germany” and “a strong negative signal to the global biopharmaceutical industry that Germany does not view our industry as a strategic sector.”
“I think it will lead to changes in the investment environment in Germany going forward,” he said.
Large pharma companies are cutting back in Germany as the Trump administration is ramping up political pressure on drugmakers to onshore investments in the U.S. while pushing for higher drug spending by foreign countries. The Office of the United States Trade Representative recently launched a Section 301 investigation into what it called “persistent underpayment” for medicines in Germany.