New ECIPE study on “International EU27 pharmaceutical production, trade, dependencies and vulnerabilities”

Faced with the COVID-19 pandemic, global supply chains have shown remarkable resilience, and open markets and open trade have been one of the key reasons behind this. Therefore, while some dependencies in certain products exist, protectionism and autonomy are not the right way to go.

These are some of the key findings in a new ECIPE study on “International EU27 Pharmaceutical Production, Trade, Dependencies and Vulnerabilities”. The report provides evidence on EU27 production, imports, and exports of pharmaceutical products, and on how imports and exports have developed over time. It highlights the limited EU dependencies on e.g., China, and the vulnerability of EU exports if all countries in the world would reduce their import dependencies. The report also makes suggestions on ways forward. 

The report notes that the COVID-19 pandemic has not had a major impact on EU27 trade in pharmaceutical products within and outside the EU27. In fact, 81% of pharmaceutical imports in the EU27 come from Europe itself. Looking at quantities, the picture is similar with 71% of pharmaceutical products coming from Europe. The results show that just over 6% of EU imports in value terms and 0.8% in volume terms are having a high level of import dependency. The EU also has export vulnerabilities: if all countries in the world would go for reductions in imports, the EU will be hardest hit in the world, because 64% of all global final pharmaceutical product exports come from the EU.

The report notes that if the EU27, despite its strong current performance in terms of production and exports, nonetheless wants to increase its strategic resilience further, this should be done via the following policies:
  1. Strengthen global supply chains and keep them open.
  2. Reduce import dependencies by diversifying sources of supply, not by reducing imports.
  3. Use the EU bilateral trade strategy and EU economic diplomacy to strengthen security of supply.
  4. Create incentives for R&D and production in Europe in order to reduce dependencies long-term.
These policies will increase the EU's agility, competitiveness and pandemic preparedness and help the EU to maintain its attractiveness as a global trade hub. The new EU ‘Open, sustainable and assertive trade strategy’, revised EU industrial policy and EU pharmaceutical strategy have the opportunity to all contribute to these goals.

Download the report here.