Europe’s low-cost medicine model faces supply-chain test
A Fortune commentary says Europe’s reliance on imported medicine inputs has exposed risks that cheaper procurement alone cannot solve.
By Daniel Okafor · Business Editor
3 min read
Europe’s medicine supply chains are drawing fresh scrutiny because many essential drugs depend on low-cost production models and imported inputs, according to a Fortune commentary. The piece argues that political and business leaders widely recognize the risk, but have not yet turned that concern into enough policy or investment.
The commentary estimates that generic and biosimilar medicines account for about 70% of drugs used in Europe while representing only 10% to 20% of the region’s total drug spending. On that basis, it argues that generic manufacturers are central to European healthcare, even though their products capture a small share of overall spending.
The article says few non-biologic complex medicines are produced in Europe, and that nearly all key starting materials come from China or India. It attributes that dependence to years of pressure from payers to reduce prices, which it says has weakened the business case for European production.
Pandemic lessons
The Fortune commentary says COVID-19 made supply-chain sovereignty a higher priority in Europe, since weaknesses often become clear only under stress. It also argues that European countries have at times made it harder to move medicines within the region than to bring them in from India, because national interests can override a coordinated European approach.
The piece points to hydroxychloroquine as an example of what faster coordination can achieve in an emergency. During the pandemic, the drug was briefly viewed by some as a possible COVID-19 treatment; the World Health Organization later said it is not recommended to prevent COVID-19.
According to the commentary, manufacturers produced roughly 50 million to 100 million packs and delivered them into about 35 to 40 markets in a short period after regulators relaxed some standard requirements. The article argues that this showed European authorities can remove barriers quickly when they choose to do so.
Cost, resilience and policy
The commentary says the EU Critical Medicines Act may signal a shift in the regulatory setting. It also cites geopolitics involving the United States, the Middle East and relations with Central and Eastern Europe, especially Russia, as factors pushing Europe to reconsider how it secures medicines.
Full reshoring of Europe’s supply chains is described in the article as unrealistic. The commentary says companies will build plants and produce raw materials in Europe only if the financial returns support those investments.
The piece also warns that many industries could face an inflationary shock over the next six to 12 months, driven by higher costs for materials, fuel and interest rates. It says those higher costs are likely to reach customers, making medicines more expensive across the board.
The commentary argues that Europe is strong at passing laws but does not always account for the practical effects on supply chains. It says governments and industry need to work together to protect critical medicines, because weak incentives for long-term capital spending could leave supply less secure.
The article closes by linking medicine access to Europe’s aging and less healthy population. It cites penicillin as a drug credited with saving more lives than any other medicine, while arguing that society often undervalues older low-cost treatments even when they remain essential to modern care.
This story draws on original reporting from Fortune.