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September 16, 2022updated 22 Sep 2022 8:22pm

FDI in pharmaceuticals in 2021: The state of play

Pharmaceuticals FDI fell by 17.3% in 2021 as the sector continues to experience a slow recovery from the Covid-19 pandemic.

By Sofia Karadima

The Covid-19 pandemic caused overall greenfield foreign direct investment (FDI) project numbers to decline by 17.5% in 2020. However, as the world reopened in 2021, investors reacted quickly and FDI levels rose by 18.1%, according to the Global FDI Annual Report 2022

Most sectors witnessed a rise in their number of projects, with companies keen to make up for lost time, yet the rise is not expected to be sustained with investment levels likely to fall again in 2022. Russia’s invasion of Ukraine has led to heightened geopolitical tensions, a global cost of living crisis, slow economic growth and continued supply chain disruptions, all of which will claw back the resurgence FDI experienced in 2021.

Pharmaceuticals FDI fell in 2021

Although most FDI sectors witnessed an increase in FDI in 2021, pharmaceuticals FDI experienced a decline. Our FDI Projects Database shows that there were 254 projects in chemicals in 2021, down from 307 the year before. This was yet another year of falling pharmaceuticals-related FDI, which points to the industry’s prolonged Covid-19 hangover.

Out of the 254 FDI projects in pharmaceuticals in 2021, 168 were new, with the remaining being expansion of existing facilities.

Where are the leading destinations for pharmaceuticals FDI?

Western Europe was the leading region when it came to attracting FDI projects in pharmaceuticals in 2021, with 44% of all projects announced or opened globally. 

Asia-Pacific and North America were also popular destinations for FDI in 2021; however, they experienced a drop compared with the previous year. The Middle East and North Africa, Central America and the Caribbean and sub-Saharan Africa were the three regions to attract more projects in 2021 compared with 2020.

The US remained the leading destination country for pharmaceuticals FDI in 2021, followed by France, the UK and Germany.

In 2021, Sanofi, a France-based biopharmaceutical company, expanded its manufacturing facility in Swiftwater, Pennsylvania. The project should lead to the creation of 200 new jobs.

Singapore, Spain, China, Poland and Belgium were also key locations when it came to attracting FDI projects in pharmaceuticals in 2021.

What are the top pharmaceuticals FDI operations?

Manufacturing was the leading business operation for foreign pharmaceuticals investors in 2021. A total of 108 related projects were created in the year, down from 116 the year before.

One notable project was carried out by China-based pharmaceutical manufacturing company Gan & Lee Pharmaceuticals, which specialises in the development, production and commercialisation of insulin analogues and medical devices. It opened a new manufacturing subsidiary in Düsseldorf, Germany, in 2021, investing $9.3m (65.19m yuan) and creating 600 new jobs.

Other leading functions for pharmaceutical products include sales, administration and marketing as well as research and development.

What are the top subsectors for pharmaceuticals FDI?

Pharmaceutical products was the top subsector when it came to FDI projects in pharmaceuticals in 2021, attracting 194 projects in the year, down from 232 in 2020.

Clinical research and trials ranked second. FDI clinical trials and research projects grew in 2021, with the sector attracting 43 projects in 2021, up from 37 in 2020 and 40 in 2019.

Miscellaneous pharmaceuticals and legal cannabis attracted fewer investments in 2021 compared with 2020 and 2019.

Where are the leading pharmaceuticals investors located?

The US remained the leading source market for outbound pharmaceuticals FDI in 2021; however, the number of outbound projects from the US declined in 2021 compared with the year before. There were 74 projects in 2021, down from 86 in 2020.

In 2021, Sangamo Therapeutics, a US-based biotechnology company, announced that it is strengthening its research and development centre with the establishment of a manufacturing unit for batches of drugs intended for clinical trials in Sophia Antipolis, France. The project is estimated to be worth $5.9m.

Germany ranked second in outbound investments in 2021 with 29 projects, followed by the UK and Switzerland.

What does the future hold for FDI in pharmaceuticals?

The post-Covid recovery in the pharmaceuticals sector has been much slower than most other FDI sectors. The sector experienced significant declines in 2021 and 2020; however, it is expected to see a stabilisation or even a slight upturn in 2022, according to Glenn Barklie, chief economist at Investment Monitor and head of FDI services at GlobalData. Nevertheless, the Ukraine-Russia conflict and the range of geopolitical and cost of living problems afflicting countries all over the world will affect consumer demand, which could have an impact upon the pharmaceuticals sector.

Download the full Global FDI Annual Report 2022 here. 

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