Europe's Big Pharma warns: spend on new medicines or watch innovation head elsewhere

What the industry is saying

If Europe wants the next wave of therapies to show up at home, the incentives need a rethink. Chairs of AstraZeneca Plc, Roche Holding AG and Sanofi SA, along with leaders from Boehringer Ingelheim GmbH, GSK Plc, Novartis AG, Novo Nordisk A/S, Chiesi Farmaceutici SpA and Ipsen, signed an open letter to European leaders with a blunt message: "In our boardrooms, we see Europe losing ground to global competition." Their plea is direct: "European governments must create conditions that attract investment in next-generation medicines before it's too late."

The letter draws a straight line from policy to patient access. It says "Around 40% of newly approved therapies never reach European patients," arguing that is the legacy of decades of treating medicines purely as a cost. The group says it recognizes fiscal strain, but adds that, "just like defense or energy, modern medicines should be treated as vital infrastructure and not be left to others to provide." On their agenda: allowing EU-wide leeway for countries that channel funds into health and novel therapies, accelerating trial timelines in areas where Europe now trails China, and bolstering intellectual-property rights.

Why the push is intensifying now

A big driver is coming from Washington. After US President Donald Trump announced a policy that the US would stop paying above other wealthy nations for drugs, cheaper European launch prices could undercut US price levels and margins. Earlier this year, Insmed Inc. delayed introducing its bronchiectasis drug in Europe as it assesses how the US position might affect the rollout.

All of this collides with tight budgets across the region. Thomas Hwang, an assistant professor in the faculty of Harvard Medical School, where he served as the lead author on a recent study about the US drug-price push, said, "The industry's lobbying is colliding with a hard reality." "Health budgets across Europe have little room to give."

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Policy moves reshaping company plans

Germany, battling a widening deficit in its public health insurance system, passed cost controls in July. Beginning next year, most branded reimbursable medicines will face a 15.5% mandatory rebate, up from 7% today. In response, US drugmaker Eli Lilly & Co. and Boehringer Ingelheim separately announced they will scrap certain investments in Germany. Meanwhile, the US opened a tariff investigation targeting Germany over "persistent underpayment for innovative pharmaceutical products."

Across the Channel, the industry found a more receptive ear. In the UK, manufacturers won a cut last year to the rebates they pay the National Health Service after cautioning the market had become "uninvestable." Under the agreement, the US pledged it would not levy duties on UK pharmaceutical exports for a minimum of three years.

What this means for your portfolio

Drug launch timing and where R&D money flows often follow the policy breadcrumbs. If Europe keeps squeezing budgets, expect more delayed launches locally and capital chasing friendlier markets. If governments carve out room for health spending, speed up trials, and shore up IP, more pipelines could stay closer to home. That shows up in two places that matter to you: access to treatments where you live and the trajectory of European pharma names you might own.

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