Gary Cartwright

For years, Europe has talked grandly about “strategic autonomy” while quietly outsourcing much of its pharmaceutical security to factories in China and India.

The Covid pandemic exposed the fragility of that arrangement in brutal fashion. Patients across the continent discovered that even basic antibiotics, insulin, anaesthetics and cancer drugs could suddenly become scarce.

Now, at long last, Brussels appears to have grasped the seriousness of the problem.

This week, the European Parliament and EU negotiators reached a deal aimed at tackling chronic shortages of essential medicines across the bloc, part of the wider “Critical Medicines Act” designed to rebuild Europe’s pharmaceutical resilience.

The agreement may lack the drama of summitry or military brinkmanship, but its implications are enormous. Europe’s dependence on foreign supply chains has become not merely an economic inconvenience, but a strategic vulnerability. Medicines, after all, are not luxury goods. They are as essential to national resilience as energy, food or defence manufacturing.

The uncomfortable truth is that Europe allowed itself to drift into dependency because it suited politicians and procurement officials to chase the lowest possible prices. Manufacturing was steadily relocated abroad, particularly to Asia, where production costs were lower and environmental rules less stringent.

The result is that today a vast proportion of active pharmaceutical ingredients used in Europe originate outside the EU.

When supply chains function smoothly, this globalisation model appears efficient. But the moment disruption strikes — whether from pandemics, geopolitical tensions, export restrictions or industrial accidents — the entire system begins to wobble alarmingly.

The European Court of Auditors warned last year that the continent still suffers from “chronic medicine shortages”, with antibiotics and painkillers among the most affected products. Pharmacies across Europe increasingly report shortages becoming routine rather than exceptional. Pharmacists now spend extraordinary amounts of time hunting for alternatives to unavailable drugs.

The EU’s response is therefore understandable, and in many respects overdue.

The new deal seeks to strengthen domestic manufacturing capacity, diversify supply chains and encourage the production of critical medicines within Europe itself. Member states would be allowed to prioritise suppliers that improve security of supply rather than simply awarding contracts to the cheapest bidder. The legislation also aims to streamline procurement and improve coordination between governments during shortages.

In essence, Brussels is attempting to apply the logic of strategic defence policy to healthcare.

There is considerable merit in that approach. Europe has learned — painfully — that hyper-globalisation creates vulnerabilities that hostile powers can exploit. It is difficult to speak confidently about sovereignty while relying on overseas factories for life-saving drugs.

Yet there is also a risk that Brussels, true to form, attempts to regulate its way to pharmaceutical security without properly addressing the underlying economics.

Manufacturing medicines in Europe is expensive. Labour costs are higher, regulatory burdens heavier and energy prices often punishingly elevated. If European governments insist on ever-lower drug prices while simultaneously demanding more domestic production, they may discover that pharmaceutical companies simply invest elsewhere.

That danger is already becoming apparent. Reuters recently reported concerns that Europe is losing attractiveness as a destination for pharmaceutical innovation and launches. Drugmakers increasingly complain that the EU’s regulatory environment is cumbersome while returns are lower than in the United States.

This presents Brussels with a difficult balancing act.

On one hand, politicians want medicines to remain affordable and universally accessible. On the other, they need pharmaceutical firms to manufacture, innovate and invest within Europe. Those goals do not always align neatly.

The broader reform of EU pharmaceutical legislation has already sparked fierce debate about exclusivity periods, generic competition and investment incentives. Some industry figures warn that reducing commercial protections too aggressively could drive research and production out of Europe altogether.

And there lies the central contradiction at the heart of the EU’s ambitions. Strategic autonomy is expensive.

Europeans have become accustomed to enjoying Scandinavian-style welfare systems while expecting American-style innovation and Chinese-level manufacturing costs. Reality does not permit such luxuries indefinitely.

If Europe genuinely wishes to secure its pharmaceutical independence, it will require substantial public investment, more flexible state aid rules and perhaps a willingness to tolerate somewhat higher healthcare costs in the short term.

There is also a geopolitical dimension that Brussels rarely states openly. The world is entering an era of harder-edged economic nationalism. The United States is aggressively subsidising domestic industries through programmes like the Inflation Reduction Act. China continues to dominate critical manufacturing sectors with immense state backing.

Against such competitors, Europe’s traditional faith in frictionless global trade suddenly appears naïve.

Medicines, perhaps more than any other product, demonstrate why strategic industries cannot simply be left to the invisible hand of the market. During a crisis, governments that lack domestic production capacity quickly discover how little control they truly possess.

That lesson was absorbed in masks, semiconductors and energy. Pharmaceuticals are merely the next chapter.

The EU’s medicine shortages plan is therefore not simply a healthcare initiative. It is part of a much wider European awakening — a gradual recognition that resilience matters more than theoretical efficiency.

Whether Brussels can deliver on those ambitions without drowning industry in bureaucracy remains another question entirely.

The European Union has an unfortunate habit of announcing grand industrial strategies only to suffocate them beneath regulatory complexity and political compromise. If the bloc genuinely wants factories built in Europe rather than press releases written in Brussels, it will need pragmatism as much as ambition.

Still, for once, the direction of travel is broadly correct.

Europe cannot continue depending on fragile overseas supply chains for the medicines that keep its citizens alive. The age of complacency has ended.