You are here

Home »

Critical choices for critical medicines

AmCham EU

5 Sep 2025

‘I’m sorry, but that medication is out of stock.’  

When you or a loved one is sick and needs medicine, these are words you never want to hear your pharmacist say. As the world learned during the COVID-19 pandemic, shortages of critical medicinal products can be worsened or even unintentionally caused by protectionist and uncoordinated responses to supply chain difficulties.   

Tomislav Sokol (EPP, Croatia), MEP and rapporteur in the European Parliament’s Committee on Public Health, recently tabled his initial report on the European Commission’s proposed Critical Medicines Act, which aims to secure the availability of critical medicinal products throughout the EU. While the draft report recognises the need for procurement to be based on more than price, its emphasis on localising production in Europe risks undermining the very resilience the legislation seeks to achieve. 

As the legislative process moves forward, it’s an apt time to reflect on how the Parliament, along with the Commission and the Council, can help resolve the structural challenges in Europe’s medicines supply chain. By working together, the public sector and the private sector can enable diversification across the medication manufacturing process and ensure that every European patient has access to the medications they need.  

Limits of localisation

It might seem logical that if every component of a prescription drug was manufactured closer to home – a process known as localisation – it would be easier for patients to access critical medicines.   

However, the data shows this isn’t the case. A 2024 Commission supply chain vulnerability assessment revealed that all 11 critically vulnerable medicines studied depended on a single country or manufacturer for over 30% of their supply. The assessment also found that all 11 molecules already had more than 70% of at least one production stage located within the EU. In other words, the medicines with the highest localisation in Europe are paradoxically those most vulnerable to disruption, demonstrating that the real problem lies in concentration, not geography. This underlines the significant risks created by market concentration, particularly for multi-sourced, off-patent products. 

Moreover, no medicine currently on the market has sourcing of all necessary ingredients from solely one jurisdiction – in fact, one medicine can have up to 350 components. Supply chain risks also arise from factors such as unpredictable demand linked to diseases’ seasonality or economic pressures on prices, which can disrupt or exacerbate issues caused by the concentration of medication production regardless of geographic location.  Along with the potential for shortages, forced localisation policies also open the door to discriminatory protectionism, which can hinder Europe’s pharmaceutical sector, its contribution to the EU’s preparedness and more broadly, patient access to medicines in the region and globally.  

The EU is one of the largest exporters of pharmaceuticals internationally, and patients around the world rely on the region for a steady and secure supply of medicines. Both in and outside the EU, protectionist policies threaten the sector’s global competitiveness, economic growth and resilience. They are especially damaging to companies that operate internationally – including many pharmaceutical companies – and consequently rely on efficiently calibrated and integrated supply chains.  

Dividends of diversification

To best protect European patients’ access to medicine, the EU must avoid enacting restrictive localisation measures and instead strengthen pharmaceutical supply chain resilience by enabling diversification in the region and globally. When pharmaceutical inputs – including the various components of medicines and the equipment used to produce them – are sourced from hundreds of locations, companies need to be able to effectively foresee risk in their supply chains and manufacturing processes in order to properly respond to unexpected shocks in particular regions. This flexibility is not available to companies restricted to domestic production.   

Medical supply chains that are built on vast, interconnected networks that span continents can ensure that essential medical products are produced and delivered to patients in Europe and around the world. No country can make every medicine it requires, and no medicine is manufactured in every country. Imports from established trade partnerships go hand in hand with exports of critical medicines to secure global health.  

US pharmaceutical companies with a strong European footprint are a key part of the diversified pharmaceutical supply chains that keep critical medication flowing to European patients. With suppliers and manufacturers around the world, they drive innovation and access by providing the necessary resources for large-scale research, development and manufacturing capacities to keep the sector competitive and dynamic.  

While the EU and Member State governments play an important role as facilitators, integrators and providers of infrastructure and emergency resources, it is companies that operate supply chains and maintain direct control over sourcing strategies, inventory management and distribution networks. To protect European patients’ access to critical medication, companies need a framework that supports their ability to safeguard production around the world.  

AmCham EU's recommendations

Effective coordination between governments and the private sector is key for building resilient supply chains. The American Chamber of Commerce to the EU’s (AmCham EU) recent position paper on the proposed Critical Medicines Act argues that the EU’s policy measures must be targeted, evidence-based, proportionate and aligned with international commitments to avoid unintended consequences for supply sustainability and patient access.  

In particular, to ensure agility, adaptability and security of supply chains, policymakers should consider: 

  • Strengthening supply chain resilience through global diversification rather than localisation; 
  • Promoting international partnerships, trade facilitation and regulatory convergence; 
  • Mandating the use of most economically advantageous tender criteria in public procurement and avoiding protectionist practices; 
  • Enabling flexible pricing for off-patent medicines to support supply sustainability; 
  • Ensuring collaborative procurement remains voluntary, is used only as a last-resort mechanism and does not undermine national systems; 
  • Avoiding uncoordinated contingency stock or stockpiling measures that disrupt markets or impose additional requirements; 
  • Reducing regulatory burden through harmonisation, digitalisation and regulatory flexibility; and 
  • Ensuring inclusive governance with strong and consistent industry involvement. 

By adopting this approach, the EU can avoid protectionism and foster an attractive, stable and predictable market environment that supports life sciences innovation and manufacturing in Europe.