Towards openness-based European preference in the pharmaceutical sector
The pharmaceutical sector faces mounting pressures from supply chain concentration, geopolitical rivalry and competing industrial policy models. Around 55% of global API production is concentrated in China and India. As China combines strategic planning, public funding and a large domestic market to accelerate biomedicine as a national priority, the US is deploying tariffs, tax credits and fast-tracked approvals to attract investment back home. Europe risks repeating the trajectory of steel, solar panels and electric vehicles: starting from strength and being systematically outcompeted.
The Critical Medicines Act and Industrial Accelerator Act mark a shift towards European preference, in light of the evolving geopolitics and geo-economics. A narrow "made in EU" framing, however, risks fragmentation, higher health system costs and WTO exposure. A more durable model prioritises EU-anchored innovation, diversified supply chains and trusted international partnerships over strict localisation rules.
Manufacturing follows innovation; without improvements to regulatory efficiency, capital availability and pricing frameworks, localisation requirements will be difficult to sustain. Ensuring long-term resilience and the EU’s competitiveness also requires protecting the economic viability of critical medicines.
In pursuing strategic partnerships, the EU can build on existing trade agreements and established cooperation with partners such as Australia and Switzerland. It remains unclear how EU-preference rules will be compliant to WTO commitments, and third trusted countries as well as industry are seeking greater clarity.
A further risk lies in legislative incoherence. The CMA, IAA, Biotech Act and the forthcoming Public Procurement Directive revision each contain procurement-related provisions, drafted on distinct timelines. Without active coordination, their interaction could deepen single market fragmentation rather than address it.
Four priorities follow: coordinate legislative instruments before layering them, operationalise evidence-based supply-chain vulnerability assessments under the CMA, default to multi-winner tenders for critical medicines procurement, and align (national) pricing and reimbursement frameworks with EU industrial policy ambitions.
Read the full Policy Brief here.
Paweł Świeboda is a Senior Visiting Fellow and Co-Director of the Brussels Economic Security Forum, the EPC’s flagship project on economic security.
Elizabeth Kuiper is Associate Director and Head of the Health and Societal Resilience Programme at the European Policy Centre.
Samuel Goodger is a Policy Analyst in the European Policy Centre’s Health and Societal Resilience Programme.
This Policy Brief draws on the discussions from a European Policy Centre Round Table, held in Brussels on 22 April 2026. The authors are grateful to the participants of the Round Table for their invaluable insights.
The project is pursued in collaboration with Amgen, CSL and Viatris.
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