Reduce dependence on imports? The EU requires the procurement of 'European medicines'

Reuters and Politico Europe reported on the 12th that the European Parliament and the European Council reached a preliminary agreement on the "Essential Medicines Act" on the same day, proposing to introduce new public procurement standards to strengthen the supply of essential medicines in the EU by increasing local production capacity and reducing dependence on imports.

According to reports, in the past few decades, the pharmaceutical supply chain in Europe has increasingly shifted overseas, gradually flowing to countries with lower production costs for finished drugs and active pharmaceutical ingredients. The pharmaceutical industry has stated that EU countries typically adopt a "winner takes all" procurement bidding approach, prioritizing the selection of the cheapest drugs. Meanwhile, the pricing policies previously implemented by the United States have impacted the pharmaceutical industry, causing delays in the launch of some cutting-edge therapies in Europe. EU Medicines Agency Director General Cook stated last month that Europe is at a "critical moment" in ensuring drug supply and urged member states to strengthen coordination.

According to the above agreement, the EU will vigorously promote "strategic projects" in the industrial sector and support eligible enterprises to create, transform or expand production capacity; Authorize EU institutions to prioritize local production in public procurement, including rewarding suppliers based on the proportion of drugs and active pharmaceutical ingredients (i.e. active pharmaceutical ingredients) produced within the EU. According to reports, the agreement will then be submitted to the European Parliament and the European Council for formal approval procedures.

Reuters reported that this agreement marks a step forward for the Critical Medicines Act. The bill aims to address the supply chain vulnerability of approximately 270 critical drugs considered to be related to the health and safety of the region. These drugs cover key drugs such as antibiotics, insulin, and vaccines, as well as multiple drugs for chronic and rare diseases.

The European version of Political News Network believes that in the face of increasing geopolitical tensions, this new law aims to reduce dependence on countries such as India and China for key drugs and their raw materials, thereby achieving supply chain diversification and stimulating the development of local manufacturing in Europe.

Analysts from the US consulting firm Eurasia Group warned earlier this year that the EU's increasingly strong tendency to "buy European goods" could raise concerns among businesses and potentially exacerbate trade tensions between the US and Europe.

Dong Yifan, Associate Researcher at the Institute of Country and Regional Studies at Beijing Language and Culture University, stated in an interview with Global Times on the 13th that under the current geopolitical pressure, the EU's move is essentially an extension of its economic security and "risk reduction" policy ideas. The EU still regards its external import exposure as a source of risk and dependence, and increasingly examines supply chain partner countries from a geopolitical and security perspective.

Dong Yifan believes that this move may have a certain impact on the normal economic and trade exchanges of the European Union, pushing up the cost of corporate compliance and supply chain restructuring, and may even have an impact on traditional European advantageous industries such as the pharmaceutical industry in the short term.