As Europe rethinks how medicines are priced, regulated, and manufactured, the off-patent sector is moving to the centre of the policy debate. Adrian van den Hoven, Director General of Medicines for Europe, examines the pressures shaping the market, from supply resilience and environmental rules to biosimilars, trade tensions, and the need for smarter industrial strategy. He also argues that, beneath Europe’s familiar self-criticism, the region retains the capabilities to turn reform into renewed competitiveness.
What progress did Medicines for Europe see in 2025, and where did the main challenges remain?
From our perspective, 2025 delivered genuine progress, particularly in areas that matter most for access, competitiveness, and supply security. The most notable step forward was the political agreement reached in December 2025 on the new EU pharmaceutical package. While formal adoption is still to come, the agreement represents an important milestone in updating Europe’s regulatory framework, with the potential to simplify procedures, accelerate patient access, and create a more competitive environment for medicines manufacturing and development.
We also saw encouraging movement on industrial policy through the proposed Critical Medicines Act. That reflects a growing recognition in Europe that medicines cannot be treated as an ordinary commodity market. Security of supply, diversified sourcing, and manufacturing resilience have become strategic priorities, and rightly so after the disruptions of recent years.
At the same time, there were clear areas of concern. The challenge is not environmental ambition itself, because our sector is already investing heavily in lower emissions, energy efficiency, renewable power, and stronger environmental standards across production sites for antibiotics. We support that direction and see many opportunities where sustainability and competitiveness reinforce one another.
The difficulty arises when legislation is developed without sufficient regard for the realities of medicines production and supply. Two files illustrate that risk in particular: the Urban Wastewater Treatment Directive and the proposed restrictions on PFAS, or per- and polyfluoroalkyl substances. Both pursue legitimate environmental goals, but they must also take account of how essential medicines are manufactured and delivered. If that balance is missed, Europe risks creating new supply pressures at the very moment it is trying to strengthen resilience.
How can Europe pursue its environmental ambitions while safeguarding medicines production, availability, and long-term supply security?
There should be no contradiction between environmental progress and a strong medicines sector, and in many respects there is not. Across Europe, our members are investing in greener manufacturing, lower energy consumption, renewable integration, tighter emissions control, and improved wastewater management. We have also worked with the innovative sector on common standards for antibiotic production to help reduce the risk of antimicrobial resistance linked to wastewater discharge. These are practical examples of industry moving in the right direction.
Where concerns arise is when regulation shifts from improving industrial processes to imposing disproportionate burdens on products that are already supplied on extremely thin margins. Under the Urban Wastewater Treatment Directive, manufacturers will bear a substantial share of the cost of removing “micropollutants” (chemical residues from the consumption of medicines) from wastewater. The Commission claim that pharmaceuticals represent 66 percent of the total “micropollution” from chemical residues is clearly based on incorrect data regarding the toxicity of certain commonly used medicines. For high-volume, low-cost generic medicines, those added charges could make supply uneconomic in some markets. That is not simply a question of profitability. It raises the prospect of product withdrawals, fewer suppliers, and greater shortage risks for patients and healthcare systems.
The PFAS debate requires the same degree of pragmatism. We understand the need to address pollution linked to certain industrial uses or the production of these substances. However, PFAS also play a role in parts of pharmaceutical manufacturing, including filtration systems, specialised equipment, sterile production environments, packaging, and some formulations where alternatives may not yet be available.
Our position on PFAS is therefore straightforward. The pharmaceutical sector must be properly assessed and treated proportionately in any future restriction. Where substitutes exist, transition should follow. Where they do not, workable timelines and targeted exemptions are needed. Europe should not be forced into a false choice between environmental progress and access to essential medicines when sound policy can secure both.
What still needs to change in Europe’s pricing and procurement systems to ensure off-patent medicines remain sustainable and reliably supplied?
Low pricing remains one of the most persistent structural pressures in Europe’s off-patent medicines market, particularly for categories such as antibiotics and oncology generics, where products are medically essential but often economically fragile. Many of these medicines have been generic for years, and pricing systems across much of Europe were designed to maximise savings through reference pricing, reimbursement controls, and intense tender competition. That model has succeeded in reducing prices, but in many markets it offers little flexibility when manufacturing and supply costs rise. The result is a system that continues to reward lower prices while placing growing strain on long-term supply.
Some countries have begun to respond to that imbalance. Sweden, Portugal, Greece, and Romania have introduced targeted measures after recognising that excessive downward pressure can ultimately reduce competition and create availability risks. Germany has also adjusted pricing for certain paediatric formulations, where children’s medicines had been reimbursed below adult equivalents despite being more complex and expensive to produce. France has taken related steps. These are constructive developments, although they remain incremental rather than evidence of a broader redesign.
At the European level, the proposed Critical Medicines Act is a more significant shift because it acknowledges that medicines markets cannot be governed solely by the logic of lowest cost, single winner tenders (whereby the ‘loser’ may end up withdrawing from the market altogether). While pricing and reimbursement remain national competences, the Act aims to strengthen resilience, reduce shortages, and support manufacturing capacity across Europe. Just as importantly, it introduces a more balanced view of procurement, giving greater weight to security of supply, supplier diversity, and production reliability rather than price alone. That change matters particularly in hospital tenders and other markets where purchasing systems shape competitive dynamics.
Further reform, however, is still necessary. The sector continues to face rising costs in energy, logistics, packaging, and petrochemical-derived inputs, while inflationary pressures feed directly into production economics. Companies have adapted repeatedly to disruption, but cost escalation is far harder to absorb in a tightly regulated market with limited pricing flexibility. If Europe wants secure and sustainable supply, pricing systems must evolve to reflect economic reality, including workable mechanisms that allow responsible adjustment when input costs materially increase.
How effective is the proposed Critical Medicines Act in its current form, and where could it go further to strengthen resilience across all member states?
I would question the suggestion that the Critical Medicines Act primarily advantages the largest countries. In reality, many of those distortions already exist under the current system. Major markets such as France and Germany have introduced extensive national stockpiling obligations that require companies to reserve supply specifically for domestic use. That can reduce flexibility when shortages arise elsewhere and place smaller or medium-sized markets under greater strain. Countries such as Belgium or the Czech Republic are often more exposed because they rely on the same shared European supply base but have less market weight.
The significance of the proposed Act is that it begins to treat medicines security as a common European responsibility rather than a patchwork of national responses. While the final shape of the legislation is still being negotiated, the principle of greater proportionality is an important one. A more coordinated framework for stockholding, supply continuity, and shortage management would represent a clear improvement on the fragmented model that exists today.
There is also a wider strategic point. Competing regions already support pharmaceutical manufacturing through direct incentives, industrial policy, or targeted funding, whether in India, China, or the United States. Europe has been slower to adopt that mindset. If future EU funding mechanisms support active pharmaceutical ingredient production and off-patent medicines manufacturing on an open, pan-European basis, they could strengthen capacity across the Union rather than concentrating benefits in a handful of larger markets.
As a major wave of biologic exclusivity expires, how can Europe turn its biosimilars leadership into faster uptake, wider access, and stronger industrial growth?
Biosimilars represent one of Europe’s most immediate opportunities for both healthcare systems and industry. A substantial wave of biologic medicines is approaching loss of exclusivity, creating scope for major savings, wider patient access, and new manufacturing investment. Our industry is already preparing for that transition because the value of upcoming biologic patent expiries is comparable to the most significant cycles previously seen in traditional generics.
Europe deserves recognition for establishing the global regulatory foundation for biosimilars, and the recent move by the European Medicines Agency and Heads of Medicines Agencies toward a more tailored clinical pathway is an important advance. Where science supports it, unnecessary comparative efficacy trials should no longer be routine. Removing avoidable studies can lower development costs, accelerate approvals, and avoid placing patients in trials that add limited additional value. The US Food and Drug Administration and the Medicines and Healthcare products Regulatory Agency moved earlier in this direction, so Europe now needs to match that pace operationally.
Regulatory progress alone, however, is not enough. Uptake remains uneven because prescribing restrictions often remain long after biosimilars have reduced costs. In some systems, patients must progress through older therapies or face caps before receiving biologics. Once lower-cost alternatives are available, those barriers should be revisited. The real prize is not only lower expenditure, but the ability to treat more patients earlier and more effectively. There is also a concern over the biosimilar void where we see biologics losing exclusivity but no announced biosimilar for that target. This applies to around 70 percent of biologics approaching loss of exclusivity. There should be tools to encourage our industry to target more biologic losing exclusivity to bring more competition, access and supply to Europe. If Europe combines smarter regulation, stronger uptake policies, and continued manufacturing investment, biosimilars can become a major driver of access, sustainability, and industrial growth.
Why are value-added medicines becoming more important, and how can better incentives unlock new uses and better formulations for established therapies?
Value-added medicines remain one of the more practical and under-recognised opportunities in healthcare because they focus on improving medicines that already exist rather than starting again from first principles. That may mean developing a new indication for a well-established molecule, creating a formulation better suited to children, improving ease of administration, or adapting treatment for patient groups whose needs were not fully considered when the medicine was originally developed. The recent EU pharmaceutical reform is relevant here because, while it does not change patent law, it introduces new regulatory incentives for certain repurposed off-patent medicines. Where companies invest in generating evidence for a new use or clinically meaningful adaptation of an older therapy, a period of regulatory data protection can help create a credible basis for investment. The legislation also encourages research from universities and charitable organizations into repurposing with a unique marketing authorisation process.
The wider challenge has often been economic rather than scientific. Many promising repurposing opportunities emerge from researchers, clinicians, or patient groups, yet stall because there is no clear route to development, approval, and commercialisation. That is why initiatives such as REMEDi4ALL matter. By bringing together regulators, funders, researchers, patients, and industry, they can help convert worthwhile ideas into treatments that reach the market. In many cases, the required investment is modest when compared with novel drug development, while the potential benefit to patients and health systems can be substantial.
Some of the clearest opportunities lie in populations that have historically been underserved. Children still rely too often on adult medicines that are not ideally designed for paediatric use, while reimbursement systems do not always reflect the greater complexity of developing suitable formulations for smaller populations. Women’s health offers another important avenue, particularly where historic clinical data and dosing models were built around predominantly male populations. In both cases, relatively targeted investment could improve dosing, adherence, tolerability, and outcomes at scale. There is interesting scientific and clinical data in relation to adherence in the cardiovascular area which would justify a small investment for a big health outcome benefit. If incentives are structured sensibly, value-added medicines can become one of the most efficient ways to deliver meaningful public health progress.
How are tariffs, geopolitical tensions, and wider supply chain disruption changing the strategic outlook for Europe’s accessible medicines sector?
Geopolitical volatility has become a structural reality for the medicines sector rather than an occasional external disturbance. For manufacturers of generics and biosimilars, where margins are inherently tight, the prospect of tariffs is especially concerning because even modest additional costs can materially affect supply economics. One point that is not always fully appreciated is Europe’s role in supplying the United States, particularly in hospital medicines, antibiotics, and more complex product categories. While India remains dominant in many retail generic segments, European producers are an important source of supply where technical capability and continuity matter most. That helps explain why there was a strong transatlantic interest in keeping medicines outside tariff disputes. In this market, protectionist measures are more likely to increase costs and aggravate shortages than improve resilience.
The more immediate pressure, however, often comes through inflation rather than direct interruption. Recent crises, from the war in Ukraine to instability affecting the Middle East and key shipping corridors, have driven higher energy prices, freight costs, packaging expenses, and petrochemical-based input costs. The sector has become considerably better at managing operational disruption after COVID-19 and earlier logistics bottlenecks, yet repeated cost shocks are far harder to absorb in a highly regulated environment where pricing flexibility remains limited. As a result, distant geopolitical events can translate quickly into local pressure on medicine availability.
These trends are shifting priorities in two clear directions. First, they reinforce the case for open trade and lower barriers for medicines, active ingredients, and critical inputs, including through trade agreements that level the playing field such as the EU-US Turnberry Agreement, the EU-Mercosur and the EU-India free trade agreements. Second, they have elevated health security as a strategic industrial issue. Europe needs manufacturing systems that are efficient in normal conditions yet capable of scaling output, switching production, or reallocating supply during emergencies. That does not require idle capacity for its own sake, but better incentives, deeper digitalisation, and closer coordination between industry and public institutions. Awareness has increased significantly, although practical decision-making still needs to follow.
As Europe looks toward 2027, what gives you the greatest cause for concern, and what gives you the strongest reason for confidence?
My principal concern is that Europe risks creating a false choice between environmental progress and access to medicines when the two should be entirely compatible. Our sector supports the sustainability agenda and continues to invest in cleaner production, lower emissions, and more efficient manufacturing. The difficulty arises when well-intentioned policies do not sufficiently account for their practical effect on medicines availability or supply continuity. Essential medicines answer an immediate public need, while environmental goals are very important over the longer term. In certain cases, we need to accept that medicines – those which treat cytotoxic cancer are a good example – will have an impact on the environment to save lives. The task for the next few years is therefore not to choose between them, but to design policy with enough balance and precision to secure both.
There are, however, compelling reasons for optimism. Demand for medicines will continue to grow as Europeans live longer and healthier lives, with affordable medicines already making a significant contribution to that outcome. The recently agreed EU pharmaceutical package offers a genuine opportunity to modernise regulation through greater digitalisation, more efficient procedures, and improvements such as the broadened Bolar exemption, which should help generics and biosimilars enter the market more quickly once exclusivity ends. Alongside that, initiatives such as the proposed Critical Medicines Act and the wider European Union biotech agenda suggest a more strategic approach to resilience, manufacturing, and health security. Europe can sometimes undervalue its own strengths, yet it retains a highly skilled workforce, deep industrial capability, and world-class scientific expertise. If policymakers and the wider medicines ecosystem align more effectively behind those advantages, the region is well placed to build lasting momentum.
