EU to Support the Production of APIs and Finished Medicines within Europe

On 29 Jan. 2025, the European Parliament (EP) held a public hearing to discuss ways to support the production of APIs and finished medicines within Europe (1). The European Union (EU) faces a growing challenge in securing its supply of essential pharmaceuticals, with the majority of its APIs and finished medicines currently imported from Asia, namely India and China.

API role in drug development

APIs play a pivotal role in the pharmaceutical industry. They are essential for the efficacy and safety of drugs. The quality of APIs directly impacts the effectiveness of the final drug product (2). Whilst the globalization of the medicines supply chain has helped to increase access to cheap, high-quality medicines, the supply chain has grown longer, more complex, and fragmented, and countries have become more reliant on overseas API suppliers (2).

The European API sector is considered highly competitive, given its technical know-how and strong workforce capacities (3). API manufacturing is an important sector, generating €60 billion per year and employing more than 150,000 people throughout Europe (3). Over the past two decades, Europe’s API manufacturing capabilities have decreased from 42% share of the market in API Drug Master Files (DMFs) in 2000 to 10% in 2023, highlighting the long-term trend of decreasing API manufacturing activity within Europe (Figure 1). There has also been a shift of small-molecule APIs and related intermediates production towards Asia, and more than 74% of the European medicine value chain depends on imports (Figure 2).

Whilst India remains the market leader in API manufacturing, China has exhibited strong growth and expanded its role in global API production, accounting for almost one-third of all DMF filings in 2023 (4). These findings underscore the importance of monitoring the pharmaceutical supply chain to understand and adapt to market dynamics and reduce any perceived threats that the EU’s reliance on API imports may have on public health in the Member States.

Reshoring API manufacturing in Europe

Reshoring pharmaceutical production in Europe and promoting geographic diversity in API manufacturing will help reduce supply chain vulnerabilities and the risk of drug shortages (5). This was the conclusion of the Environment, Public Health and Food Safety report, Potential Measures to Facilitate the Production of Active Pharmaceutical Ingredients (APIs), published in March 2023 (5). The study confirmed that reshoring would require financial support from governments to the pharmaceutical industry, but this was not the only factor. Further solutions were proposed including agreements with local chemical suppliers (e.g., key materials), the consideration of fee or tax benefits, the development of new production technologies to accelerate automation and reduce labour costs, incentives to encourage the use of environmentally friendly technologies, the creation of training and programmes to develop workforce needs, and the alignment of existing policies (6).

On 11 Mar. 2025, the European Commission (EC) took the first step in this direction and proposed the Critical Medicines Act, setting out a plan to improve medicine procurement, provide subsidies for drug production, and improve supply chains to reduce the risk of drug shortages (7). But time is running out.

The EU needs to move quickly or risk a manufacturing exodus to the US

In April 2025, the European Federation of Pharmaceutical Industries and Associations issued a stark warning that “unless Europe delivers rapid, radical policy change, then pharma research, development, and manufacturing is increasingly likely to be directed towards the [United States]” (8). The CEOs of the research-based pharmaceutical industry called for immediate action on:

• adopting a world-leading regulatory framework conducive to innovation
• achieving a competitive EU market that attracts, values, and rewards innovation in line with other economies at the forefront of patient care
• ensuring policy coherence across environmental and chemical legislation to secure a resilient manufacturing and supply chain of medicines in Europe
• strengthening rather than weakening Europe’s intellectual property provisions (8).

In the meantime, the uncertainty created by the threat of US tariffs on pharmaceuticals means there are limited incentives for pharma to invest in the EU and a significant push to relocate to the US. In the past month, several pharmaceutical companies—Eli Lilly, Johnson & Johnson, Merck, Novo Nordisk, and Novartis—have announced their plans to expand manufacturing facilities in the US (9). Whilst it may take several years for these sites to become fully operational, it sends a clear message that market dynamics have changed, and the EU will need to move quickly and invest in its pharmaceutical ecosystem, or it will fall behind and be held to ransom by overseas suppliers (8).

References

1. EP. Overreliance on Imports of Active Pharmaceutical Ingredients. Committee of Public Health. 29 Jan. 2025.
2. SEQENS. Enhancing Drug Development: A Comprehensive Guide to API Manufacturing. Seqens.com. 17 Jan. 2025. (accessed 15 Apr. 2025).
3. Medicines for Europe. EP Hearing on “Overreliance on imports of Active Pharmaceutical Ingredients (APIs)”. Committee for Public Health (SANT) European Parliament. 25 Jan 2025.
4. Quality Matters. Global Manufacturing Capacity for Active Pharmaceutical Ingredients Remains Concentrated. U.S. Pharmacopeia Blog. 6 Nov. 2024
5. CHESSMEN. Identifying the Root Causes of Observed Shortages of Medicines. 2024. Ja-chessmen.eu (accessed 16 April 2025).
6. ENVI. Potential Measures to Facilitate the Production of Active Pharmaceutical Ingredients (APIs). March 2023.
7. EC. Proposal for a Critical Medicines Act. EC.europa.eu. 11 Mar. 2025
8. EFPIA. Pharma CEOs Alert President von der Leyen to Risk of Exodus to the US. Efpia.eu. 8 Apr. 2025.
9. POLITICO. Trump Says Pharma Tariffs Will Entice Back Drug Production. They Won’t. Politico.eu. 14 Mar. 2025.

About the author

Cheryl Barton is founder and director of PharmaVision, Pharmavision.co.uk.

Article details

Pharmaceutical Technology® Europe
Vol. 37, No. 5
May 2025
Pages: 6-7

Citation

When referring to this article, please cite it as Barton, C. EU to Support the Production of APIs and Finished Medicines within Europe. Pharmaceutical Technology® Europe 2025 37 (5).