Why Germany is not participating in the EU project

IPCEI designates important projects of common European interest. Companies can apply for participation, which enables them to receive large government grants, loans and guarantees – far more extensive than EU state aid law would normally allow. So far there are such projects for hydrogen, battery cells, the chip industry and the cloud.

Germany’s absence from the pharmaceutical project is doubly surprising. The new federal government had promised increased resilience in the area of ​​health. At the same time, Economics Minister Robert Habeck (Greens) has made an active industrial policy one of his most important projects.

According to Handelsblatt information, Germany’s participation did not fail because of Habeck either. In fact, the vice chancellor already had a ministerial proposal for the commitment to the project on his desk, government circles report. But the Ministry of Finance did not want to release the funds, it is said.

Companies and unions are making representations to ministers

In a letter, an alliance of leading pharmaceutical companies, including the market leaders Johnson & Johnson, Roche and Novartis, together with the IG BCE union, has now personally addressed Habeck and Finance Minister Christian Lindner (FDP).

“Dear Federal Ministers, we urgently appeal to you to use the remaining time window and examine how Germany can join this central initiative,” says the letter, which is available to the Handelsblatt. Otherwise, Germany threatens to “slip in the location competition”.

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The time window is almost closed. The industrial policy project is divided into two phases. The first applications from companies will be submitted to the European Commission in June, but Germany is already too late for that.

The second phase is scheduled for October. If the federal government were to start collecting the needs of companies in the next few days, it could just about be enough. But it doesn’t look like that either.

According to the manifesto of the other 16 EU countries, projects to develop innovative and environmentally friendly technologies for the production of medicines, innovations for the treatment of rare diseases and to react to future pandemics as well as the development of gene and cell therapies are funded. According to government circles, half a billion to one billion euros would have to be provided from the federal budget.

The Ministry of Finance, which only referred to the Ministry of Economic Affairs on request, wants this, but obviously will not provide it, at least in the current year. Habeck’s house explains that the manifesto could not be signed at all because the budget is still being coordinated.

Dependence on China, India and the US “significantly increased”

In principle, it is possible to join the project at a later date. “Germany has contributed very actively to the design of an IPCEI Health in recent months,” it said.

However, the project is not to be found in the statements of the almost unified federal budget for the current year. Financial leeway is limited given the war in Ukraine, high energy prices and the aftermath of the pandemic.

At the same time, Lindner wants to allow the debt brake to apply normally again in the coming year. Apparently there is no money left for the pharmaceutical industry, which has not earned badly in the past few months anyway.

But that is too short-term a view, industry representatives counter. Dependence on China, India and the USA has increased significantly in recent years, explains Claus Michelsen, chief economist at the Association of Research-Based Pharmaceutical Manufacturers (VFA).

“Particularly in the field of innovative medicines, where development and production go hand in hand, the risk that Europe will lose significant ground is growing,” he says. Europe can only counterbalance this with an IPCEI. The representatives refer in particular to medium-sized companies, which, unlike the pharmaceutical giants, are less in the public eye.

There are also problems in intra-European competition

This includes IDT Biologika, which also signed the letter to Habeck and Lindner. The Saxony-Anhalt company with 1,600 employees is working on making vaccine production more efficient. During the pandemic, Johnson & Johnson and Astra-Zeneca relied on IDT.

The company can look back on more than 100 years of history. However, managing director Jürgen Betzing is now worried about the future. “The US and Asia, especially China, have recognized the importance of new technologies in the pharmaceutical and biotech industries. There is massive funding and also structural support,” he says.

>> Also read here: How Europe is becoming the leading biotech location

It can already be seen that young scientists with ideas that could change the world would rather settle in China or the USA than in Germany. “If we cannot stop this development, the consequences would be devastating,” warns Betzing.

He also points out that it is not just about competition with China and the USA. “The fact that Germany has so far refused the IPCEI Health also gets us into trouble in European competition,” he says.

France has already pledged 1.5 billion euros for its healthcare industry for the first round. “Some companies and scientists may not want to go to the USA or China at all – but they would certainly not have a problem with France or the Netherlands if the conditions there are so much better,” Betzing worries.

The federal government is also likely to have a long-term interest in IDT. Berlin has signed contracts with the company to provide vaccines until 2029.

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