Some of Europe's manufacturers of important antibiotic ingredients are closing their largest domestic factories and transferring certain production to China, which has caused efforts to reduce dependence on Asian drugs in Brussels.
The loss of Xellia Pharmaceuticals says China's competition can only be treated by transferring some of its production to factories there.
Half of Xellia's active pharmaceutical ingredients (API) are characterized by recent lists of key medicines and the World Health Organization's list of essential medicines.
The Danish company told employees on Tuesday it would close its Copenhagen plant, causing 500 jobs to lose. Currently, it will retain more cost-effective European operations in Budapest.
Its CEO Michael Kocher said that unless the government-funded health system is ready to pay more for generic drugs, more and more companies in the EU will move their factories.
"We are talking about reapplying. I think it's just as important to make sure what we have in Europe," he told the Financial Times in an interview with the Financial Times.
Xellia's pharmaceutical ingredients include vancomycin hydrochloride, which is needed to produce antibiotics that can treat severe infections, such as sepsis, such as sepsis, which are resistant to other drugs.
About 80% of the APIs used by the EU come from China. With tight health systems reluctant to raise drug prices, Kocher suggested that subsidies are the only way to ensure that the EU retains some kind of control over this important ingredient.
"Otherwise, not only 80% of the API will come from China. It will soon be close to 100%."
Koch emphasized that if market conditions improve, Western demand for vancomycin hydrochloride can still be met from Budapest.
The European Commission announced in March that it could be included in the Key Drug Act to try to address the dependence of the COVID-19-19 pandemic, when countries did not have equipment such as drugs, protective clothing and ventilators.
These recommendations aim to increase EU production in more than 200 drugs, from antibiotics such as penicillin and erythromycin to painkillers such as lidocaine and morphine.
Measures discussed include allowing countries to join bulk purchases and favoring EU-made products during the procurement process. But Cocher said these policies were too timid and took too long to implement.
“Costs are increasing, you try to transfer those fees to customers and then your customers think the costs are too high, increasing the share from China,” he said. “We are looking for a commitment to support the ongoing action.”
Research-intensive pharmaceutical companies also warn that low prices paid by European health systems are pushing new drug discovery efforts to the United States and China.
The CEOs of Novartis and Sanofi wrote to the committee last month, demanding higher prices. They also noted that U.S. tariffs prompted companies to invest in North America. However, Xellia said there is no plan to do so.
Xellia is owned by Novo Holdings, the controlling shareholder of Danish pharmaceutical company Novo Nordisk*, which sells to more than 500 businesses in 80 countries. It will take ten years to slowly transfer production from the Copenhagen plant elsewhere.
Cossell said the EU should be more valuable for "life-saving" products to treat meningitis and other fatal conditions. "Without our portfolio, we will face a huge challenge. Covid will be a minor issue by comparison," he said.
*This article has been updated to clarify ownership of Xellia Pharmaceuticals.