For decades, Europe has been one of the world’s pharmaceutical powerhouses. Home to globally recognised companies, world-class research institutions and a highly skilled workforce, the continent has played a central role in developing innovative medicines that have transformed healthcare worldwide. Yet, in recent years, Europe has found itself under growing pressure.

The United States continues to dominate pharmaceutical investment, venture capital and biotechnology innovation, while China has rapidly expanded its manufacturing capabilities and research ecosystem. At the same time, the COVID-19 pandemic exposed Europe’s dependence on global supply chains for active pharmaceutical ingredients (APIs), medical products and essential medicines.

Today, Europe is responding. Through new legislation, industrial policies, digital innovation and significant investments in research and manufacturing, the European Union is attempting to regain global leadership while strengthening its strategic autonomy. The question is no longer whether Europe can remain a pharmaceutical leader—but whether it can reinvent itself quickly enough.

A Strategic Industry Beyond Healthcare

Pharmaceuticals have become much more than a healthcare sector. They are now recognised as a strategic industry with implications for economic growth, industrial resilience, public health and geopolitical influence.

According to the European Federation of Pharmaceutical Industries and Associations (EFPIA), the research-based pharmaceutical industry directly employs around 900,000 people across Europe, making it one of the continent’s largest high-technology industries and one of the continent’s largest investors in research and development.

The scale of investment demonstrates the strategic importance of the sector. According to EFPIA, pharmaceutical companies invested approximately €50 billion in research and development in Europe in 2023, confirming the industry’s position as one of the continent’s most research-intensive sectors. However, this investment gap is increasingly concerning, as the United States has become the preferred destination for a growing share of global pharmaceutical R&D and biotechnology funding.

The pandemic fundamentally changed political priorities. Shortages of medicines and disruptions in global logistics demonstrated that relying heavily on external suppliers could create serious vulnerabilities during international crises. Strategic autonomy has therefore become a central objective for European policymakers.

A New Pharmaceutical Strategy for Europe

Recognising these challenges, the European Commission launched its Pharmaceutical Strategy for Europe, representing the most significant reform of EU pharmaceutical legislation in over twenty years.

The strategy is built around four major objectives:

• ensuring patients have faster and more equitable access to innovative medicines;
• encouraging pharmaceutical innovation and competitiveness;
• strengthening supply chain resilience;
• making Europe’s regulatory framework fit for future technologies.

Rather than focusing solely on healthcare, the strategy reflects a broader industrial vision. Europe aims to become an attractive destination for pharmaceutical investment while maintaining high standards of safety, quality and sustainability.

Recent reforms are also designed to reduce medicine shortages by diversifying manufacturing locations and encouraging production within Europe, particularly for critical medicines.

European companies are also investing heavily in next-generation technologies. France’s Sanofi has committed significant resources to strengthening its vaccine innovation capabilities, including mRNA platforms. In 2025, the company inaugurated a new vaccine R&D excellence unit in Marcy-l’Étoile, France, representing a €120 million investment. Sanofi has also invested approximately €935 million since 2022 to build an integrated mRNA vaccine value chain in France, illustrating how European pharmaceutical leaders are attempting to secure technological capabilities locally rather than relying entirely on external ecosystems.

Artificial Intelligence Is Reshaping Drug Development

One of the most profound changes affecting the pharmaceutical industry is the rapid integration of artificial intelligence.

Traditionally, discovering a new medicine has been an expensive and lengthy process, often requiring more than ten years of research and billions of euros in investment. AI is beginning to change that equation.

Machine learning algorithms can analyse enormous biological datasets, identify promising molecular candidates, optimise clinical trial design and even predict potential side effects long before human testing begins. This enables pharmaceutical companies to reduce development timelines while improving the probability of success.

Recognising this transformation, the European Medicines Agency has placed artificial intelligence at the centre of its strategy to 2028. Regulatory agencies across Europe are increasingly preparing for AI-assisted scientific assessment, digital evidence and advanced data analytics throughout the medicine lifecycle.

For Europe, AI represents more than a technological opportunity. It offers the possibility of increasing productivity, attracting investment and narrowing the innovation gap with competitors in the United States and China.

The GLP-1 Revolution Extends Far Beyond Obesity

Perhaps no recent pharmaceutical innovation has attracted more attention than GLP-1 receptor agonists.

Originally developed for treating type 2 diabetes, medicines such as semaglutide and tirzepatide have demonstrated remarkable effectiveness in managing obesity. Yet researchers increasingly believe their potential extends much further.

Clinical studies are now exploring applications in cardiovascular disease, chronic kidney disease, fatty liver disease, sleep apnoea and even neurodegenerative disorders. What initially appeared to be a breakthrough in metabolic medicine may ultimately reshape multiple therapeutic areas.

This has enormous implications for healthcare systems and pharmaceutical investment. Demand for these medicines continues to grow worldwide, forcing manufacturers to expand production capacity while governments evaluate how to balance innovation with affordability.

Europe is fortunate to host one of the global leaders in this field, Denmark-based Novo Nordisk, highlighting the continent’s continued ability to generate world-class pharmaceutical innovation. Nevertheless, maintaining this leadership will require sustained investment and supportive industrial policies as global competition intensifies.

The GLP-1 revolution therefore extends far beyond obesity treatment. It exemplifies how scientific innovation, industrial strategy and healthcare policy are becoming increasingly interconnected. For Europe, the challenge is no longer simply to produce innovative medicines, but to create the industrial and regulatory environment that allows such innovations to be discovered, manufactured and made accessible at global scale.

The scale of Novo Nordisk’s expansion illustrates the industrial challenge behind pharmaceutical success. To meet global demand for GLP-1 medicines and other advanced therapies, the company has launched one of the largest manufacturing investment programmes in Europe’s pharmaceutical sector. In 2025, Novo Nordisk reported DKK 60.1 billion (€8 billion approximately) in capital expenditure, mainly dedicated to expanding API production, fill-finish capacity and manufacturing flexibility. Earlier investments included DKK 42 billion in expanding production facilities in Kalundborg, Denmark, and DKK 8.5 billion for a new production facility in Odense.

Manufacturing Remains Europe’s Greatest Challenge

Innovation alone will not secure Europe’s leadership.

One of the most significant weaknesses revealed during the pandemic was Europe’s dependence on overseas production of active pharmaceutical ingredients and essential medicines. Over several decades, much manufacturing migrated to Asia, driven by lower production costs and economies of scale.

As geopolitical tensions increase and supply chains become more fragile, governments are encouraging the reshoring or diversification of pharmaceutical manufacturing.

This strategic shift is also reflected in the investment decisions of leading pharmaceutical companies. While European firms continue to invest in advanced manufacturing capabilities within Europe, they are also expanding production globally to remain close to key markets and strengthen supply chain resilience. AstraZeneca, for example, recently opened a €360 million next-generation active pharmaceutical ingredient (API) manufacturing facility in Dublin, designed as a highly automated and digitally enabled plant to support its future pipeline while reinforcing Ireland’s position as one of Europe’s leading pharmaceutical manufacturing hubs. At the same time, the company has announced major manufacturing investments in the United States, illustrating how pharmaceutical leaders are increasingly diversifying production across strategic regions rather than relying on a single manufacturing base.

However, rebuilding industrial capacity is neither simple nor inexpensive.

European manufacturers face higher labour costs, strict environmental regulations, complex permitting procedures and rising energy prices. While these factors support sustainability and quality, they also reduce international cost competitiveness.

The challenge for Europe is therefore not to compete on price alone, but on reliability, innovation, advanced manufacturing technologies and regulatory excellence.

Increasing automation, digital manufacturing and Industry 4.0 technologies may become decisive competitive advantages in achieving that objective.

Competing in a New Global Landscape

The pharmaceutical race is no longer simply between companies—it is increasingly a competition between innovation ecosystems.

The United States continues to attract enormous levels of private capital and biotechnology investment. China is rapidly expanding research capacity while building integrated pharmaceutical manufacturing ecosystems supported by long-term industrial strategies.

Europe’s competitive position is increasingly squeezed between two very different innovation models. The United States dominates venture capital and biotechnology entrepreneurship, while China combines state-backed industrial policy with rapidly expanding manufacturing capacity. Europe still excels in science, but scientific excellence alone no longer guarantees industrial leadership.

Its strengths remain considerable: excellent universities, leading scientific research, a highly qualified workforce and strong regulatory credibility. Yet maintaining global leadership will require faster decision-making, greater investment in breakthrough innovation and closer collaboration between governments, regulators, academia and industry.

Recent statements from European health authorities acknowledge that Europe has reached a critical moment. Improving access to innovative medicines while remaining an attractive destination for pharmaceutical investment has become one of the defining challenges for the coming decade.

Looking Ahead

Behind every scientific breakthrough lies a significant industrial challenge. Developing biologics, vaccines, cell therapies or advanced medicines requires large-scale manufacturing facilities, specialised equipment, highly qualified teams and complex regulatory approval processes. The future of pharmaceutical leadership will therefore depend not only on discovering new molecules, but also on Europe’s ability to execute large industrial programmes efficiently and competitively.

Europe’s pharmaceutical industry stands at a crossroads.

The continent is not starting from scratch. It possesses exceptional scientific talent, globally respected companies and a regulatory framework recognised for its quality. What is changing is the strategic context.

Healthcare has become intertwined with industrial policy, economic security and technological sovereignty.

Artificial intelligence, advanced manufacturing, personalised medicine and resilient supply chains are redefining what pharmaceutical leadership means in the twenty-first century. The winners will not necessarily be those producing medicines at the lowest cost, but those capable of combining innovation, industrial resilience and speed.

For Europe, the opportunity is real—but so is the urgency. Europe has the scientific talent, industrial base and regulatory credibility to remain a global pharmaceutical leader. The real question is whether policymakers and industry can move at the speed required by a market that is evolving faster than ever. In pharmaceuticals, leadership is no longer secured over decades—it is earned through continuous innovation, resilient manufacturing and the ability to bring breakthrough therapies to patients before competitors do.

For further reading, you may consult these sources:

1. EFPIA – The Pharmaceutical Data Industry in Figures
2. SANOFI – Sanofi inaugure en France sa nouvelle unité d’excellence R&D Vaccins
3. Nature Medicine – Framework for the pharmacological treatment of obesity
4. Annual report 2025 – Novo Nordisk
5. European Commission – Pharmaceutical Strategy for Europe.
6. EURACTIV – AstraZeneca opens $360m drug manufacturing facility in Dublin as Ireland bets on pharma resilience
7. European Medicines Agency – European Medicines Agencies Network Strategy to 2028.
8. European Medicines Agency – Artificial Intelligence Observatory.
9. European Medicines Agency – Joint Strategy to 2028.
10. European Commission – Apply AI Strategy.
11. Reuters – European health chief says EU is at a critical point in ensuring new drug access (April 2026).