What regulators are weighing and why it matters
Sandoz says Europe's regulator is proposing to take amoxicillin off the EU's roster of critical medicines, a move the company argues would heighten exposure to lower cost rivals in China and India. Amoxicillin, part of the penicillin family, is used for infections ranging from pneumonia to skin ailments.
Chief Executive Officer Richard Saynor was blunt: "We're now literally on one minute to midnight to deciding whether we continue to stay in Europe making penicillin." In May, the company took its case to the European Commission, lodging an anti-dumping complaint about Chinese amoxicillin imports and describing the moment as a "breaking point" while seeking a "level playing field for the industry."
Inside the Kundl site and its utilization
Kundl is the continent's last facility that produces penicillin from start to finish, making both core antibiotic ingredients and finished doses. When its expansion opened, Sandoz said the site could turn out 240 million packages per year.
Less than three years back, public funding of about €50 million ($56 million) went into upgrades at the site to curb Europe's reliance on Chinese and Indian suppliers after a shortage that started in late 2022 and ended in mid-2025. Since then, cheaper antibiotics from China and India have kept the site from running full tilt. According to Saynor, the site has sufficient scale to cover most of Europe and North America, yet it is running a little above half capacity. He has long argued that antibiotics are priced so low they undercut local output, adding, "If Europe says it's perfectly Ok for you to go and buy Chinese API, why should we be penalized as a business for manufacturing a product in Europe when all of our competitors effectively can buy heavily subsidized drug substance from China?"
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Global supply and pricing backdrop
Similar pricing dynamics show up in the US. "The health care system chooses the cheapest products whether it's a drug or medical surgical supplies," said Mike Vaughn, who serves as president of Adora Life Science and sits on a consortium working to reshore US antibiotic production. "Without restrictions against subsidized Chinese supplies, incentives to build made in America is a waste of taxpayer money."
The fermentation base is concentrated in China. Qyobo GmbH reports that, out of 15 plants globally that ferment the two essential starting materials for penicillin, 10 are located in China and zero operate in the US. Qyobo adds that Kundl is the only large plant outside China able to ferment and make APA-6, a crucial amoxicillin precursor, for regulated markets. Meanwhile, prices for the API used in injectable amoxicillin have dropped 56% since January of last year, near an all-time low.
The investor angle
Sandoz shares fell as much as 8% Wednesday after the company reported lower than expected third quarter sales and cut its guidance. At the same time, the European Union has nearly completed work on rules to bolster domestic manufacturing of medicines labeled critical, including allowing public tenders to factor in local production instead of price alone. Negotiations over what will appear on the critical medicines list are scheduled to run into next month. The European Medicines Agency did not respond to a request for comment.
The bottom line: the EU's critical list decision, API price trends, and any trade case outcomes will drive margins and capacity choices across antibiotics. Watch Kundl's utilization, API price stabilization, and how procurement rules are written to gauge how this could flow into your portfolio.
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