Undeterred by tariffs and global competition, pharma manufacturers are seeing an opportunity in Europe and continuing to invest accordingly.
Europe’s share of international pharma manufacturing has declined drastically in the past 25 years. European active pharmaceutical ingredient (API) drug master files, the documents on APIs submitted to the US Food and Drug Administration (FDA), fell from 42% of global filings in 2000 to just 10% in 2023 according to US Pharmacopeia’s medicine supply map.
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Drug shortages during the Covid-19 pandemic laid bare the continent’s manufacturing shortfall. To combat this, more recently the EU Pharma Package, a proposed overhaul of Europe’s pharmaceutical law, was agreed upon by the Council of the European Union and European Parliament and now needs to be formally endorsed by both before it can be adopted.
The agreed package includes a provision allowing EU countries to require companies to supply medicines sufficient to meet patient needs or otherwise lose marketing and data protections. It also reduces the current two years of marketing protection to one year — retaining eight years of data protection — while expanding the Bolar exception, which deals with patent protection. This expansion makes developers’ proprietary data available to others to ensure generics and biosimilars can be launched immediately after intellectual property rights expire.
Some experts question if these measures can lead to meaningful change. However, contract development and manufacturing organisations (CDMOs) in Europe and overseas are making substantial investments in European manufacturing. They say many factors, from unforgiving regulatory standards to international trade tensions—often blamed for the continent’s struggle to keep up with manufacturing hubs abroad— may in fact present opportunities for growth.
Europe is a gateway to the US and an arena to hone standards
In April 2025, 32 pharmaceutical companies, including AstraZeneca, Novo Nordisk, and Roche, cosigned a letter to European Commission president Ursula von der Leyen threatening to pull out €16.5bn ($18.75bn) of planned investment in Europe over the next three years due to dissatisfaction with the EU’s regulatory framework and concern around declining investment.
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By GlobalDataNonetheless, manufacturing projects continue to emerge. In October 2025, CDMO AGC Pharma Chemicals, a European subsidiary of the Japanese AGC Group, inaugurated a new facility to produce highly potent APIs in Barcelona, Spain. AGC acquired the plant from Boehringer Ingelheim in 2019 and invested over €100m ($119m) to increase productive capacity, seeking to use the plant to serve European and US customers, according to Takuma Yamamoto, director of strategic planning and global marketing at AGC Pharma.
Yamamoto says the acquisition reflects a regionalised strategy assumed by the CDMO. This is especially driven by US customers’ growing reluctancy to source from Chinese suppliers following rising tensions between the two countries. These sentiments are evident in the BIOSECURE Act, which has provisions on withholding US federal funding from supporting China’s biopharma developers and was signed into a law in December 2025.
American developers are therefore looking elsewhere for pharma supply, says Yamamoto. US president Donald Trump’s slew of trade tariffs, including a 15% tariff on EU pharma imports, was intended to return industrial production to the US. Though several drugmakers have committed to investing in US manufacturing, Yamamoto says production costs remain high, such that Europe is still an attractive option for many in the US looking to outsource manufacturing.
The region’s stringent regulatory standards, far from a deterrent, are seen as an additional benefit to establishing European operations, Yamamoto states. According to him, these inherited high standards are now being incorporated into AGC’s wider practices.
Within the European Union, being based in Poland gives Kutno-headquartered Mabion a unique value proposition in this respect, as per Nigel Stapleton, VP of Business Development and Head of Europe at Mabion. Based within the EU for the last almost 2 decades and therefore adhering to the same high regulatory standards as all European manufacturing facilities, there is a cost advantage with manufacturing in Poland over the US or other parts of Europe, says Stapleton. Additionally, Poland boasts a well-educated workforce and a strong, internationally-oriented infrastructure, he says.
When the US tariffs were being first floated in 2025, Stapleton’s proposition to US companies was “Why not make your European supply in Europe?” The pharma company can then control costs, including transportation-related expenses, and have a reliable partner in the EU, he says. And within the EU, Stapleton says the company’s cost advantage for manufacturing, from development to commercial, would be at par with Asian partners since Mabion is based in Poland.
In addition to regulatory standards, the scientific knowledge built in European institutions over a long time is also a key asset. In a sea of CDMOs, Laupheim, Germany-headquartered Rentschler Biopharma’s unique proposition lies with its scientific expertise built over nearly half a century, says Patrick Meyer, global head of business development at Rentschler Biopharma.
In 2024, Rentschler Biopharma made its single largest investment at its Laupheim site with plans to build a buffer media station that will aid biopharmaceutical production when the site is operational by 2028. The company said this investment “underscores its commitment to the Laupheim headquarters and to the future of Germany and Europe as leading biotechnology hubs”. This is a key milestone towards increasing capacities, running more batches, and generally expanding on the strategy for the Laupheim site, says Meyer.
Calls for regionalisation from CDMOs
Nonetheless, CDMOs are diversifying based on their clients’ interests. As a family-owned business, Meyer says Rentschler Biopharma has been able to design long-term plans, including its work in the US, which was part of its strategy even before the tariffs announced in 2025.
The company has allowed for redundancy between its Milford, Massachusetts and Laupheim, Germany sites such that clients who want to transfer products to the US site can interchange, and have the choice to manufacture where they want to, says Meyer. New US companies tend to want to manufacture in the US, he adds.
In 2023, German CDMO Sanner completed the main structure for its new headquarters and production site in Bensheim, Germany, which CEO Stefan Verheyden says is now his “core focus”. Yet, in the same year, Sanner opened the second of its manufacturing facilities in Kunshan, China and its first US facility in Greensboro, North Carolina, which began production in June 2025.
Sanner’s strategy, centred on agility and flexibility allows the CDMO to compete alongside larger companies, serving customers across the US, China, and Europe. Local representation means Sanner has been largely shielded from Trump’s pharmaceutical trade tariffs, he adds.
“[The] China business is probably one of the fastest growing pillars of the organisation,” says Verheyden. Nonetheless, Verheyden envisions a “reignition” of Europe’s biopharma sector, saying a revitalisation in Europe is exactly why the company’s Bensheim facility has been “brought to life”.
With additional reporting from Manasi Vaidya
