In 2025, Europe’s pharmaceutical industry has become emblematic of broader structural challenges facing the continent’s healthcare and medical technology sectors. A series of reports and executive warnings highlight that Europe’s standing in pharmaceutical production, innovation, and long‑term health sovereignty is under increasing pressure from global competitors—particularly the United States, China, and India. These developments have implications not only for drug manufacturing but also for the wider medical equipment landscape, as regulatory environments, investment priorities, and innovation ecosystems shift in response to global market dynamics.

I. Declining Pharmaceutical Production and Health Sovereignty

A key concern for European health policymakers is the significant decline in domestic pharmaceutical production capacity. Once the world leader in medicines and active pharmaceutical ingredients, Europe has seen its share of global manufacturing capacity decrease sharply. According to recent reporting, the continent’s share of active ingredient production has fallen from over 80 % in the late 1990s to around 30 % by 2025—a dramatic structural shift that reflects growing reliance on manufacturing bases in China and India. 

This decline has real consequences: Europe now depends heavily on non‑European suppliers for a large proportion of essential drugs, including antibiotics and other critical medicines. Such dependence has strategic implications for health sovereignty, defined as a nation’s or region’s ability to independently secure essential healthcare resources without external vulnerability.

II. Innovation Slowdown and Patent Trends

Compounding the issue of manufacturing capacity is a broader innovation slowdown, particularly in medical and pharmaceutical sectors. Recent data from the European Patent Office reveal a decline in patent applications in both medical technology and pharmaceutical fields in 2024. While overall patent filings remained relatively stable, applications specifically related to medical device technology and drug innovation fell by notable margins—a trend that could signal weakening competitive momentum in areas critical to future healthcare technology leadership. 

Such a drop in innovation output raises concerns about long‑term competitiveness, especially as other regions, notably the U.S. and China, are intensifying investment in both high‑end medical devices and pharmaceutical R&D. A sustained decline in innovation patents can reduce Europe’s ability to develop next‑generation treatments and technologies that often drive growth in adjacent medical equipment and devices markets. 

III. Executive Warnings on Strategic Direction

Industry leaders have echoed these structural concerns. Executives such as Pascal Soriot, CEO of AstraZeneca, have warned that Europe could risk losing its pharmaceutical industry’s global standing unless it reforms investment strategies and health policy frameworks. Soriot has emphasized that Europe spends a smaller share of GDP on innovative medicines compared with the United States, leading to reduced attractiveness for research and manufacturing investment. This dynamic has reportedly prompted major pharmaceutical companies to pivot efforts toward U.S. facilities, citing stronger market incentives and infrastructure support. 

Soriot has gone further to suggest that, without meaningful change, Europe’s industry could be “reduced to a shadow of itself within 15 years,” as investment flows increasingly favor markets with higher returns and stronger innovation incentives. 

IV. Regulatory and Policy Responses

European institutions have taken steps to address these trends, including developing policies aimed at strengthening medicine supplies and reducing external dependencies. One such initiative, the Critical Medicines Act, seeks to enhance preparedness for shortages by identifying critical medicines, coordinating monitoring across member states, and improving industrial policy coherence. The European Commission and national regulators have also emphasized the importance of diversifying supply chains and bolstering local production for essential drugs.

Nevertheless, debates persist over the most effective strategies to restore competitiveness. Efforts to reshore manufacturing have been complicated by cost structures, regulatory complexity, and differing national priorities. Some policymakers advocate broader incentives for local R&D and manufacturing, while others emphasize partnerships and strategic alliances with global producers to reduce risk without imposing protectionist measures.

V. Impact on the Medical Equipment Ecosystem

Although this article focuses on pharmaceuticals, the implications extend into medical device and equipment markets as well:

Supply Chain Resilience: A weakened pharmaceutical sector contributes to broader healthcare supply chain volatility—a risk that also affects medical equipment producers who depend on integrated supply networks and access to critical components.

Innovation Linkages: Pharmaceutical R&D and medical technology innovation often overlap, particularly in areas like diagnostics, therapeutic devices, and integrated digital health solutions. A slowdown in one sector may dampen collaborative innovation across adjacent fields.

Regulatory Environment: As Europe adjusts regulatory frameworks to prioritize health sovereignty and supply stability, medical equipment manufacturers may encounter both opportunities (e.g., incentives for local production) and challenges (e.g., heightened compliance standards).

VI. Outlook: Navigating Strategic Transition

Experts suggest that Europe’s future in healthcare innovation and manufacturing will depend on balanced strategies that promote investment in high‑value technologies, regulatory modernization, and collaborative public‑private partnerships. Strengthening education, workforce development, and domestic R&D investment—alongside smart trade and cooperation policies—could help rekindle competitiveness in both pharmaceuticals and medical devices.

In an increasingly interconnected global healthcare landscape, maintaining innovation leadership while securing supply chain resilience remains central to Europe’s long‑term vision for health sovereignty and industry growth.