INDUSTRY OVERVIEWThe PharmaceuticalIndustry in Germany

ISSUE 2021/2022

THE PHARMACEUTICAL INDUSTRY IN GERMANY

Germany – Europe’s Largest
Pharmaceutical Market“Germany is one of the most developed healthcare markets in the world anda strategic gateway to the EU single market for international companies.”
Prof. Dr. Hagen Pfundner
Management Board, Roche Pharma AG

EUR 46.4 bn

5.1 %12.5 %EUR 83.2 bn

pharmaceutical industry revenue in 2019 –the biggest pharmaceutical market in Europeof revenue invested in R&D in 2018 – the highest
rate among all major industry sectors inGermany

EUR 7.4 bn

R&D investments by pharmaceutical companies
in Germany in 2018

Combining cutting edge-innovation, a long tradition as
the “world´s pharmacy” and continuously growing demand for healthcare products, Germany is the ideal location
for pharmaceutical R&D, production, and sales of medicines. Driven by trends such as demographic change, a risein chronic diseases and an increasing emphasis on prevention and self-medication, Europe’s biggest pharmaceutical market is growing faster than the German economy.
Germany belongs to the world’s leading clinical trials locations and - based on R&D investment and patent application levels - is the leading location for pharmaceuticalinnovation in Europe. Building on these competencies,
many German organizations have become key contributors in the global fight against the Covid-19 pandemic.

annual revenue growth in the pharmaceuticalmarket (pharmacies and clinics) over a fiveyear period (CAGR 2014-2019)

in exports of pharmaceuticals in 2018 – theworld’s leading exporter of medicinal products

83 m

population drives domestic demand for healthcare products and services

The country is the largest exporter of medicinal products and ranks among the top pharmaceutical producers worldwide. In light of the global need for personalized
medicine, Germany has also evolved into one of themain suppliers of novel biopharmaceuticals. Located in
the heart of Europe and benefiting from excellent infrastructure and a highly skilled workforce, the continent’s
most populous country offers attractive opportunities and a favorable investment climate for pharmaceutical companies planning to expand internationally.

The Pharmaceutical Industry
in Numbers
Germany’s industry numbers speak for themselves and for a secure and successful investment in the country.
Europe’s Biggest Market
Germany constitutes the major European pharmaceutical market and the fourth largest worldwide
after the USA, China and Japan. In 2019, revenues in
the overall pharmaceutical market increased by 5.7
percent, reaching EUR 46.4 billion (ex-manufacturer
prices). Approximately 86 percent of revenues weregenerated in the pharmacy segment, while 14 percent were being made in the clinic segment. During
the same year, drug sales by pharmacies (including
mail-order pharmacies) rose to EUR 58.8 billion (expharmacy prices), corresponding to growth of 5.3
percent. Prescription-only medicines accounted
for 88 percent of these sales. Whereas non-prescription medicines only generated 12 percent ofrevenue, they accounted for half of units sold.
Strong Industry Base
More than 500 pharmaceutical companies arelocated in Germany, including domestic corporations as well as subsidiaries of international enterprises. These range from big corporates like Bayer,
Boehringer Ingelheim and Merck to small innovative biotechnology start-ups. As in other economic
sectors, SMEs constitute the backbone of thepharmaceutical industry, with around 90 percent
of manufacturers having less than 500 employees.
In 2017, 234 of these companies employed fewer
than 20 staff. Overall, the German pharmaceuticalindustry has a workforce of 120,000 people (2019).

Pharmaceutical Industry Revenue in Germany
in EUR billion

31.9

34.2

2011

2013

38.0

2015

41.5

2017

Note: Revenues are based on ex-manufacturers prices.
Source: IQVIA 2020

46.4

2019

Drug Sales in the German Pharmacy Market(including Mail Order) 2019
in EUR billion and million packaging units
Prescription-only drugs
Non-prescription drugs

7.0

51.7

EUR 58.8
billion752

1,504
millionpackages

751

Note: Revenues are based on ex-pharmacy prices.
Source: IQVIA, BAH 2020

Leading Pharmaceutical Supplier
Following its tradition as the “world’s pharmacy,”
Germany generated production value of EUR 36.1
billion in 2018, making it the leading pharmaceutical manufacturing location in the EU. Located in
the heart of Europe and embedded into global
supply chains, the country imported medicines
worth EUR 56.9 billion in 2018, equivalent to anincrease of 8.1 percent. During the same period,
exports of pharmaceuticals grew by 10.3 percent
reaching EUR 83.2 billion, consolidating Germany’s
position as the world’s leading supplier of medications and the second largest importer.

Germany is theEuropean Union's
leading pharma
manufacturing
and R&D location.

R&D Excellence and Innovation
Germany provides the perfect environment forthe development and production of researchintensive, high-grade products. In 2018, thepharmaceutical industry in Germany invested
almost EUR 7.4 billion in R&D – more than in
any other European country. The German pharmaceutical sector shows the highest researchintensity across all major German industries –about 12.5 percent of revenues were reinvested
in R&D in 2018. With 499 clinical trials financed
by research-based pharmaceutical companies in
2019, Germany ranks fifth worldwide. Based on
the number of patent applications, the country
is leading in pharmaceutical innovation in Europe.
In 2018, some 584 patents were registered with
the European Patent Office by the pharmaceutical industry in Germany.

3

MARKET OPPORTUNITIESMarket Opportunities & Trends

Healthcare spending grew by 4.4
percent per year
between 2013 and2018.

Growing Healthcare Market
With 83 million inhabitants, Europe’s mostpopulous country also represents the biggest
healthcare market in the region – with expenditure continuously rising. This offers interesting
opportunities for international companies operating in the market. In 2018, health expenditurein Germany reached a new high of EUR 390.6
billion, corresponding to a per capita spending of
EUR 4,712. Between 2013 and 2018, the country’s
healthcare market grew by almost 4.4 percent
per year on average. The healthcare sector currently accounts for almost 12 percent of German
GDP, with the share steadily increasing as annual
growth rates exceed the pace of overall domestic
economic growth. Driven by developments like
demographic change, the growing prevalence ofchronic diseases, and the recent Covid-19 outbreak, this upwards trend in annual German healthexpenditure is expected to continue, after alreadyexceeding the EUR 400 billion mark in 2019.
Demographic Change
One of the main drivers of the healthcare market
is demographic change. Germany, like much ofEurope, has an aging society. Birth rates remain
low while life expectancy at birth continues togrow – reaching 84 years for women and 79 years
for men in 2020. Today, approximately half of theGerman population is older than 45 years of age
and about 22 percent are at least 65 years old,making it one of the world’s oldest populations.
Forecasts suggest that the share of the ”65 plus”
generation will increase to about one third of
the population by 2035. This age group alreadyaccounts for around half of overall healthcare
expenditure in Germany. Moreover, the numberof people aged 85 or more is expected to rise to
3.3 million by 2025 – equivalent to four percentof the population. In 2019, more than 4.2 million
people in Germany were in need of care. The riskof illness – and the probability of being affectedby several chronic diseases – goes up as age levels
rise. This leads to greater demand in the domestic
healthcare sector.
Chronic Diseases
The treatment of the growing number of patientsaffected by (age-related) chronic and incommunicable diseases constitutes a major concern of theGerman healthcare system. Together, cardiovascular diseases, psychological disorders and musculoskeletal diseases account for more than one third

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Industry Overview 2021/22  |  gtai.com

of overall healthcare spending in Germany (36.9
percent in 2015). Chronic lung diseases, cancer
and diabetes mellitus – being the most common
metabolic disorder – are also widespread among
the general population. Estimates suggest thataround six percent of German adults suffer fromasthma and almost 10 percent of adults have diabetes mellitus (including around 2 million people
with undetected diabetes). The German market
offers attractive opportunities for pharmaceuticalcompanies providing innovative drugs and novel,
more customized therapies – also for patientsdiagnosed with chronic diseases.
Health Insurance
Mandatory health insurance and different sourcesof financing contribute to solid healthcare provision – including access to medicines – in Germany.
Almost 88 percent of the German population are
insured by one of the more than 100 statutory
health insurance companies, with around 10.5
percent of the population being privately insured.
In 2018, public and private health insurers covered
nearly two thirds of total healthcare spendingin Germany, accounting for 56.8 and 8.5 percent
respectively. The remaining amount was fundedby private and public households, social long-termcare insurance, employers, statutory accident
insurance and the statutory pension fund. Pharmaceutical spending by statutory health insurances increased by 4.7 percent in 2019, reaching
EUR 41.7 billion, whereby oncological treatments
accounted for 42 percent of additional expenses.
Moreover, costs were driven by growing expenses
for pharmaceuticals for stroke prophylaxis andantirheumatic drugs amongst others. During thesame period, the leading indication areas in termsof statutory health insurer expenditures were
antineoplastics, immunosuppressive drugs, antidiabetics, and anticoagulants.
“Out-of-Pocket” Payments
Increasingly, patients are also paying for medicines “out-of-pocket”, mainly for over-the-counter
medicines and co-payments for prescribed drugs.
This trend is also driven by so-called “switches”,
meaning that previous prescription-only medicines gain the non-prescription status. This was
the case for 25 treatments between 2007 and the
beginning of 2020. In the light of growing healthcare expenses, self-medication and consultation
provided by local pharmacies may also relieve
doctors and health insurers.

Over-the-Counter (OTC) Market
Market Trends
Germany’s consumer health market is enjoying
constant growth thanks to an increasing focus
on preventive healthcare and self-medication
within German society. Following current healthand wellness trends and the desire to grow older
in good health, more and more Germans display
growing health awareness levels and an interest in a more active and healthy lifestyle. Many
consumers adopt a prevention-based attitude andare willing to invest in their health by spending
money on products supporting personal wellbeing. Moreover, patients may use OTC medicines
to treat relatively minor ailments including colds,
sore throats and the like.
Market Segments
The German OTC market comprises two major
segments: non-prescription drugs and healthproducts. Non-prescription drugs include
pharmacy-only drugs as well as OTC drugs that
may also be sold outside of pharmacies. Productgroups that are not subject to pharmaceuticallegislation - for example, nutritional supplements,
healing earths and seawater nasal sprays – belong
to the health products segment and can be soldby pharmacies as well as drugstores and supermarkets. The average annual growth rate of theGerman OTC market amounts to four percent
for the period 2014 to 2019. In 2019, revenues
increased by 3.7 percent to almost EUR 10.7 billion.
More than EUR 7.2 billion was generated in the
non-prescription drugs segment and over EUR 3.4
billion with health products – corresponding to asales volume of 811 million and 744 million packaging units respectively. Although self-medication
represents the major share of OTC sales, OTC
products prescribed by physicians represent afurther opportunity.
Competitive Landscape and Distribution
The domestic consumer health landscape issomewhat fragmented – with many international
and local players. Even market leaders – including
Bayer Vital, GlaxoSmithKline and MCM Klosterfrau – with a broad product portfolio only havesingle-digit market shares. Traditional brick-andmortar pharmacies represent the main distribution channel for OTC products and enjoy a highlevel of trust among the German population.
Almost 75 percent of revenue was generated by
the 19,000 local pharmacies in 2019, followed by
mail-order pharmacies and the mass market.

Opportunities
Remedies for the respiratory system and pain
treatments account for the highest share ofoverall OTC sales via pharmacies (including mailorder). In 2019, the vitamins and minerals segment demonstrated the highest growth rate (6.8
percent), with revenue exceeding EUR 1.1 billion.
After double-digit growth in previous years, salesof probiotics for the digestive tract increased byseven percent reaching EUR 163 million in 2019. In
terms of sales volume, eye medicines (4.9 percent),
vitamins and mineral nutrients (3.7 percent) as
well as remedies for the bladder and reproductive organs (3.6 percent) recorded the strongest
increase. The segment of OTC phytopharmaceuticals and homeopathic remedies accounted for
31 percent of total non-prescription drug sales bypharmacies. Future forecasts suggest a positivemarket development and expect OTC drug sales
to grow by around three percent per year between
2019 and 2029.

Germany’s OTC
market grewby almost four
percent to EUR 10.7
billion in 2019.

Leading OTC Segments in the Pharmacy Market by Revenue 2019
in EUR million

Cough and cold remedies,
respiratory therapeutics

2,103

Analgesics, muscle andjoint pain treatments

1,393

Products for thedigestive system

1,310

Vitamins andmineralsSkin
products

1,106
905

Source: IQVIA 2020

OTC Sales in Germany by Distribution Channel 2019
in EUR billion

Pharmacies

Mail order

6.0

0.5

1.0

1.8

Non-prescription drugs
Health products

Mass market

1.1

Note: Mass market sales include sales by drug stores and supermarkets, among others.
Source: IQVIA, BAH 2020

5

MARKET OPPORTUNITIESBiopharmaceuticals

Annual growth in
the biologics market of more than
10 percent is morethan twice that in
the overall pharma
market.

Increasing Market Share
The development of biological drugs has led to
substantial shifts in the pharmaceutical industry
landscape in recent years. Large companies have
moved their focus from small molecule drugs
towards the development and production ofcomplex biological compounds that are madewith the help of a variety of organisms. Becauseof their high therapeutic potential, biologics havetaken up a considerable share of the pharmaceutical market in Germany: From 2015 to 2019, thebiologics market grew by 11.6 percent on averageannually – more than twice the growth of theoverall pharma market. The total revenue ofbiopharmaceuticals in Germany is EUR 12.7 billion(2019), equivalent to more than a quarter of themarket for pharmaceuticals.
Market penetration has been steadily increasing inrecent years, but differs according to therapeuticarea. Biopharmaceuticals generate 80 percent of
immunology sales, whereas the figure is as low
as three percent for cardiovascular indications.
Biopharmaceutical sales in oncology grew by 23
percent in 2019, but the highest growth rate wasrecorded by anti-infectives with an increase of 40
percent.

biological entities. Gene therapies experienced
the fastest increase, with an average growth ofover 10 percent per year since 2015. Key areas of
biologics development are oncology, immunology
and infectious diseases. In the last three years,
biopharmaceuticals accounted for more than halfof all drug approvals in the European Union.
Biosimilars
As innovative biological drug patents expire,
more pharma companies have the opportunity to
manufacture and commercialize the compound –a key factor in pharma market dynamics in recent
years. Germany has shown its strength as a worldclass manufacturing location and is now one of
the global biopharma production centers. Most of
the biologicals recently developed are antibodies
that need to be produced in larger quantities than
the first-wave biologics which hit the market in
the previous decades. Due to the challenges that
this trend creates for the industry, biopharma
manufacturing will continue to be a demanding activity that requires suitable expertise andinfrastructure – making Germany a prime locationin this field. In 2019, pharma companies active inGermany were developing 20 biosimilar products
in phase III alone. From 2007 to 2019, biosimilars
sales achieved a CAGR of 69 percent.

Development Pipeline
The growing importance of biopharmaceuticals is
also reflected in the development pipeline. As of
2019, companies active in pharma R&D in Germany
were developing 640 biologics in clinical development – 82 percent of phase III assets were new
Biopharmaceuticals Sales Share in Germany
Modalities of Biopharmaceuticals Developed in Germany 201963

Phase I

Phase II

Phase IIIin EUR billion

Biopharmaceuticals
Other pharmaceuticals

162

199

Gene therapies only account for a small share of pipeline
assets, but their number grows at the fastest rate.

59
32
mABs

Vaccines

22
29
28
Other recombinant
proteins

Source: vfa, BCG 2020

6

31.4

11.2

4

14

18
5

30.1

2018

Gene therapeutics
Source: vfa, BCG 2020

Industry Overview 2021/22  |  gtai.com

12.7

2019

Pharma Manufacturing
Major Production Location
Germany is one of the world’s top locations forpharmaceutical production. In 2018, pharmaceutical production volume reached EUR 36 billion– equivalent to 18 percent year-on-year growth.
According to EFPIA, Germany is the biggest
pharmaceutical manufacturing location within
the European Union and ranks second in Europe
after Switzerland. In the field of biopharmaceutical production, Germany has the second highest
figures worldwide after the USA. Two importantfactors contributing to this excellent position are
the high-performing industrial infrastructure andthe long-standing strength of the local chemicalindustry. Between 2010 and 2019, pharmaceuticalmanufacturers in Germany recorded an increasein the gross value added by 17 percent. In 2017, thegross value added in the pharmaceutical sector
was over EUR 135 thousand per employee.
Contract Manufacturing Organizations
Germany is also home to outstanding contract
manufacturers. International and national clientscan easily obtain any service they require – frominitial product idea to final product – at moderatecost. Boehringer Ingelheim, for example, is the
only company in the world that is active acrossthe entire biopharmaceutical process chain. This
enables faster timelines and simpler coordinationof processes worldwide. The Federal Ministry for
Economic Affairs and Energy’s “Health Made inGermany” initiative can help along with GTAI to
identify possible partners. Its “German Biomanufacturing Guide” provides a comprehensive overview of biomanufacturing companies currently
active in Germany.

Investment and Trade
The investment activity of pharmaceutical companies in Germany has been experiencing a steadyincrease in recent years. Most of the investments were aimed at capacity increases, which
underlines the confidence of the local companies
in sustained growth. In the course of the global
effort to tackle the Covid-19 pandemic, calls fora reinvigoration of small molecule drug and API
manufacturing have been increasingly heard. The
economic stimulus package passed in June 2020
dedicates EUR 1 billion to this objective. Thismeasure aims to reduce the dependency on global
supply chains and is expected to trigger substantial investments in the German pharmaceuticalproduction sector in the near future. The strong
export orientation of the German pharmaceuticalindustry shows its competitiveness: In 2018, about
two thirds of its sales were generated abroad.
The export volume of pharmaceuticals has been
growing continuously since 2012 by 7.4 percent on
average annually.

HEALTH MADE IN
GERMANY – theExport Initiative of
the German Healthcare Industry:
www.health-madein-germany.com

Pharmaceutical Production in Germany
in EUR billion

36.1
29.6

29.2

30.6

2015

2016

2017

2018

Source: BPI 2019

High Production Standards
Germany is an ideal production location forresearch-intensive, high-grade products. It places
a high value on technology; this stemming fromthe country’s long history of developing and manufacturing high-quality pharmaceutical products.
The country’s particular strength lies in producing
complex products where containment and sterile
environments are critical. Hundreds of thousandsof highly skilled employees in medical-technical,
pharmaceutical-technical and engineering backgrounds enable companies to utilize efficient andcomplex production processes. Contractual agreements are secure and foreign pat­ent holders areequally well protected as Germans.

Export of Pharmaceuticals from Germany
in EUR billion

69.7

2015

70.6

2016

75.4

2017

83.2

2018

Source: BPI 20197

R&D FRAMEWORK

Research Excellence
Research LandscapeOver 30 biotechnology clusters contribute substantially to the advancement of pharmaceuticalinnovation by bundling scientific expertise as wellas connecting academic and industrial players
in the field of drug development. In addition tothe over 400 universities in Germany, numerous
specialized research institutes – including the
Fraunhofer Society, the Max-Planck-Society, theHelmholtz Centres and the Leibniz Association –conduct world-class fundamental and appliedscientific research. In total, there are over 1,000
publicly financed research institutions and morethan 500 pharmaceutical companies in Germany,
creating an innovation ecosystem that enjoys
global acclaim.
There are over
1,000 publicly
financed research
institutions andmore than 500
pharmaceuticalcompanies inGermany.

The Federal Ministry for Education and Research
has proclaimed the next ten years as the “National
decade against cancer” and correspondingly
launched initiatives to prioritize oncology researchover the coming years. The federal "High-tech
Strategy 2025" also identifies infectious diseases
as a focal point of activity over the next years.
Innovation Ecosystem
In order to foster the translation of research outcomes into successful products, the Go-BIO program supports biotechnology start-ups in bringing
their inventions to market. Since 2005, 58 newly
established biotech companies have received
support to grow into sustainable businesses. The
Life Science Incubator (LSI) in Bonn and Dresden
also helps scientists to bridge the critical gap
between a good idea and the proof of concept,
making further financing opportunities available.
Moreover, the LSI supports academics with outstanding business ideas by providing them withthe entrepreneurship expertise required for theirvalue proposition to take off.
Over 15 start-up centers specifically dedicated tofostering emerging biotech/life science companies
can be found all over Germany. They provide lab
infrastructure and a supportive environment
for biotech entrepreneurs to bring their ideas tomarket.
Industry Research
The pharmaceutical industry is known for its highR&D intensity – and Germany is no exception. In
2018, around 12.5 percent of revenues were reinvested in R&D – the highest rate among all major

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Industry Overview 2021/22  |  gtai.com

industry sectors in Germany. Approximately 18,600
researchers work in pharmaceutical and biotechnology companies in Germany. Overall, investment
in innovation in the German pharmaceuticalindustry amounts to one fifth of sales. A substantial share of pharma innovation in Germany iscontributed by over 600 dedicated biotechnology
companies that invested over EUR 1.1 billion in
research and development in 2017. In the course of
the global effort to develop vaccines and therapeutics to tackle the Covid-19 pandemic, German
pharmaceutical and biotechnology companies
have shown their strength: As of July 2020, there
were over 40 products in development. Some of
the research achievements made international
headlines, such as CureVac’s cooperation with
Tesla for the production of an RNA vaccine andthe fast-track designation for BioNTech’s vaccine
jointly developed with Pfizer.
Clinical Research
Thanks to its high population, Germany is an
attractive study location – particularly for orphan
diseases and other indications where participant
recruitment is challenging. Main hotspots forclinical research are major cities like Berlin andmetropolitan areas along the Rhine, Neckar, andRuhr rivers. With 499 clinical studies initiated by
the pharmaceutical industry in 2019, Germany
ranks among the five leading locations worldwide – directly behind the USA, China, Spain andthe UK. The most important indication areas, interms of the number of clinical studies, are oncology and inflammatory diseases – like asthma,
Morbus Crohn and multiple sclerosis – followedby cardiovascular and infectious diseases as well
as diabetes.

Number of Industry-sponsored ClinicalStudies 2019

2,352

USA

Germany counts amongst the world's leadingindustry-sponsored clinical study locations.

600

519

516

China

Spain

UK

Source: vfa 2020

499

463

Germany Canada

Pharmaceutical ResearchLandscape in Germany
Germany’s 16 federal states provide excellent
conditions for pharmaceutical research anddevelopment. Across the country, researchand development centers and biotechnology
clusters – made up of technology parks,

incubators and local agencies that bundle
biotech organizations in a single geographicalregion – interact to create a world-leading
infrastructure for clinical trials.

7.6

Schleswig-Holstein
R&D Locations : 1
Clinical Studies : 113

Hamburg

7.5
Mecklenburg WesternPomerania

R&D Locations: 1

Biotech Clusters: 1

Clinical Studies : 157

BremenBerlinBiotech Clusters: 1

Biotech Clusters: 1

R&D Locations: 6
Clinical Studies : 259

Niedersachsen

Biotech Clusters: 1

Clinical Studies : 133
Biotech Clusters: 1

North Rhine-Westphalia

Saxony-Anhalt

Brandenburg

Clinical Studies : 27

Biotech Clusters: 1

Biotech Clusters: 1

R&D Locations : 8
Clinical Studies : 401
Biotech Clusters: 5

Rhineland-Palatinate

HessenThuringia

SaxonyR&D Locations : 7

Clinical Studies : 35

Clinical Studies : 200

Clinical Studies : 151

Biotech Clusters: 2

Biotech Clusters: 2

Biotech Clusters: 2

R&D Locations : 5
Clinical Studies : 78→

Biotech Clusters: 1

SaarlandBavaria

R&D Locations : 5

R&D Locations : 13

Clinical Studies : 78

Clinical Studies : 266

Biotech Clusters: 1

Baden-Württemberg

For more information about
Germany's pharmaceuticalindustry landscape please see
our interactive online map.

Biotech Clusters: 4

R&D Locations : 5
Clinical Studies : 328
Biotech Clusters: 5

Note: R&D locations refer to vfa members.
Source: Germany Trade & Invest research, vfa 2020

9INVESTMENT CLIMATE

Business Location Germany
Europe’s Economic Hub
Germany is the largest market in Europe. It is home
to 16 percent of the EU’s population and constitutes 21 percent of Europe's GDP (EU-28). Afterten years of GDP growth and the recent economic
slowdown caused by the Covid-19 pandemic, current forecasts expect a swift recovery of the German economy and positive GDP growth rates for2021 and subsequent years. The country’s economy
is both highly industrialized and diversified – withequal focus placed on services and production.

Germany is oneof the world’s
favorite investment locations.

Top Investment Location
Germany has a welcoming attitude towards
foreign direct investment (FDI). Europe´s largest
market creates a large and stable customer basefor investors. Germany's integration into theworld economy allows companies to gain andshare knowledge, products and employees withina global network. With EUR 848 billion of FDI
stocks in 2019, Germany is a major destinationof FDI flows.
Sound and Secure Legal Framework
The legal framework for FDI in Germany favors theprinciple of freedom of foreign trade and payment.
According to the World Economic Forum, Germany
is one of the world’s best locations in terms ofplanning and operating security. The country is
also one of the world’s leading nations in terms

Quality of Infrastructure 2018
Rank

Country1

Germany

2

Japan

3

Sweden4

Netherlands

5

Austria

6

Singapore

7

USA

8

UK

9

Switzerland

10

United Arab Emirates

Source: World Bank 201810

Industry Overview 2021/22  |  gtai.com

of intellectual property protection and protection
from organized crime. The German legal systemcounts as one of the world’s most efficient andindependent.
Business-friendly Tax Conditions
Germany offers one of the most competitive tax
systems of the big industrialized countries. The
average overall tax burden for corporations is justbelow 30 percent. Significantly lower rates areavailable in certain German municipalities – up toseven percentage points less – with the overall corporate tax burden as low as 22.8 percent in someareas. Moreover, Germany provides an extensive
network of double taxation agreements (DTAs)
ensuring that double taxation is ruled out, forexample, when dividends are transferred from a
German subsidiary company to the foreign parent
company.
World-class InfrastructureWith state-of-the-art transportation networks(road, rail, sea, and inland waterways) as well asa dense network of national and international
airports, Germany provides easy access to domestic
and international markets. Germany’s infrastructure excellence is confirmed by a number of recent
studies including the Swiss IMD’s World Competitiveness Yearbook and various investor surveys
conducted by organizations like the World Economic Forum (WEF) and Ernst & Young. The 2018
Logistics Performance Index of the World Bank
ranked Germany first worldwide for its logistic
proficiency, singling out Germany’s quality of trade
and transport infrastructure. Accumulated in thisscore for Germany are high marks for the quality ofroads and air transport, excellent railroads and port
infrastructure, as well as its outstanding electricity
and water supply. As a truly global logistics hub,more goods pass through Germany than any othercountry in Europe.
Competitive Labor Costs
High productivity rates and steady wage levels
make Germany an attractive investment location.
Between 2009 and 2018 wages have risen in most
European countries (EU-28), with the growth rate
averaging 2.23 percent per year. While some countries – particularly those in Eastern Europe – experienced an annual increase of about 4 to 5 percent,Germany recorded one of the lowest labor cost
growth rates (2.18 percent) in the manufacturingsector within the EU. Highly flexible working prac-tices such as fixed-term contracts, shift systems,
and 24/7 operating permits enhance Germany’s
global competitiveness as a suitable investment
location for internationally active businesses.
Highly Skilled and Motivated Workforce
Germany’s excellent workforce is decisive to thecountry’s high productivity rates. It comprises
over 44.6 million people – making it the largest
European labor pool. More than 80 percent of theGerman workforce has received formal vocational
training or is in possession of an academic degree.
German labor flexibility is reflected in one of thehighest employee motivation levels – exceeding
those of most leading industrialized nations. Germans also lose significantly less days per annum
to strike action than employees in other European
nations.
Dual Education System
In order to secure the economy’s demand for highly
qualified personnel and to meet industry needs,
Germany developed a dual system in vocational
training – unique in combining the benefits ofclassroom-based and on-the-job training over a
period of three years. In close cooperation

Workforce in Germany by Level of Professional Education 2017
percent of total workforce

Vocational college
graduates 10%

Unskilled 18%

Skilled craftsmen(dual education
apprentices) 50%

University
graduates 22%

Source: Federal Statistical Office 2019with industry and the government, the German
Chambers of Industry and Commerce (IHKs) and
the German Confederation of Skilled Crafts (ZDH)
ensure that exacting standards are adhered to,guaranteeing the quality of training provided
across Germany.

Pharmaceutical Associations
BAH – German Medicines Manufacturers' Association
The BAH represents the interests of about 400 member
companies, which create about 80,000 jobs in Germany.
Globally operating medicines manufacturers are as
involved in the manifold activities of the association as
the broadly represented medium-sized businesses. BAH
member companies produce nearly 80 percent of the prescription-free medicines sold in German pharmacies andalmost two thirds of the prescription medicines as well
as a major part of the substance-based medical devices.
BAH advocates for secure and responsible self-medication
through professional medical and pharmaceutical advice.
→ www.bah-bonn.de
BPI – German Pharmaceutical Industry Association
With 70 years of experience in drug research, development, authorisation, manufacturing and marketing,
BPI represents the pharmaceutical industry with all its
variety. The about 270 member companies comprise thewhole spectrum of the pharmaceutical industry, ranging
from multinational corporations to SMEs and start-

ups. The members benefit from a wide range of services
and support. Current topics are discussed in more than
50 working groups. By providing information to decisionmakers at federal, state, and EU level, the BPI helps toshape the social and legal framework conditions of theindustry.
→ www.bpi.de
vfa – German Association of Research-Based
Pharmaceutical Companies
The vfa is the trade organization of research-based pharmaceutical companies in Germany. The forty-five member
companies of the vfa are among the leading researchbased pharmaceutical companies worldwide. They guarantee therapeutic progress in pharmaceuticals and ensurehigh-quality pharmaceutical therapy. Together with theirmore than 100 subsidiaries and affiliated companies, they
employ nearly 80,000 people in Germany. More than
18,000 of their employees work in the field of researchand development of pharmaceuticals.
→ www.vfa.de11

INVESTMENT CLIMATE

Financing & Incentives
in Germany
Attractive Incentive Programs
Incentives programs in Germany are available
through different public funding instruments andfor different funding purposes. The individual
funding requirements may, for example, result frominvestment projects, research and development
activities, personnel recruitment, working capitalneeds or other specific purposes. The different
incentives instruments including grants, loans andguarantees are generally available for all funding
purposes and can ordinarily be combined; thus
matching the different business activity needs at
different development stages of the company.
Please visit
our website formore incentives
information:
www.gtai.com/
incentives

Project Financing by Private Equity
Technologically innovative start-ups in particularhave to rely solely on financing through equity
such as venture capital (VC). In Germany, appropriate VC partners can be found through the
Bundesverband Deutscher Kapitalbeteiligungsgesellschaften e.V. (BVK – German Private Equity
and Venture Capital Association). Special conferences and events like the German Equity Forumprovide another opportunity for young enterprises to come into direct contact with potential
VC partners. Public institutions such as development banks (publicly owned and organized banks
which exist at the national and state level) andpublic VC companies may also offer partnershipprograms at this development stage.

Incentives in Germany

Funding purposes

Investments

Working
CapitalResearch &Development

Specific
Purposes

Personnel

Financing supported by any of thefollowing public funding instruments(combinations of instruments usually possible)
Public funding instruments

Grants12

Loans

Guarantees

EquityCapitalIndustry Overview 2021/22  |  gtai.com

Mezzanine
CapitalProject Financing by Bank Loans
Debt financing is a central financing resource
and the classic supplement to equity financing
in Germany. It is available to companies with acontinuous cash flow. Loans can be provided tofinance long-term investments, working capitaland operational costs (R&D, personnel) and forbridging temporary financial gaps. Besides offersfrom commercial banks, investors can access publicly subsidized loan programs in Germany. These
programs usually offer loans at attractive interest
rates in combination with repayment-free startup years, particularly for small and medium-sizedcompanies. These loans are provided by the KfW
federal development bank and also by regional
development banks.
Investment and R&D Incentives
When it comes to setting up production andservice facilities, investors can count on a numberof different public funding programs. These
programs complement investment project financing. Most important are cash incentives provided
in the form of non-repayable grants applicable
to co-finance investment-related expenditures
such as new buildings, equipment and machinery.
R&D project funding is made available through anumber of different incentives programs targeted
at reducing the operating costs of R&D projects.
Programs operate at the regional, national, andEuropean level and are wholly independent frominvestment incentives. At the national level, all
R&D project funding has been concentrated in
the High-Tech Strategy to push the developmentof cutting-edge technologies. Substantial annual
funding budgets are available for diverse R&D
projects.
Labor-related Incentives
After the location-based investment has been
initiated or realized, companies can receive further subsidies for building up a workforce or the
implementation of R&D projects. Labor-related
incentives play a significant role in reducing theoperational costs incurred by new businesses.
The range of programs offered can be classified
into three main groups: programs focusing on
recruitment support, training support, and wage
subsidies respectively. Labor-related incentives
play a significant role in reducing the operationalcosts incurred by new businesses.

SUCCESS STORIES

Germany – A World-Class
Pharmaceutical Location
Roche – Covering the Complete Value Chain
Founded in 1896, the Swiss-based Roche Group is
active in over 100 countries and employs about
98,000 people worldwide in 2019. With more than
30 research and development (R&D) locations
worldwide, Roche continues to explore better andsustainable ways to prevent, diagnose and treat
diseases. Roche has four strategically importantsites in Germany – Grenzach-Wyhlen, Ludwigsburg,
Mannheim, and Penzberg – which reflect the entire
value chain of the Roche Group from R&D to production and patient care.
Between 2015 and 2017, Roche invested around
EUR 600 million in its Penzberg biotechnology site
to meet growing global demand for active pharmaceutical ingredients and diagnostic tests. With
more than 5,000 employees the site is the company’s largest biotech research, development andproduction center worldwide. In May 2020, Roche
Chairman Christoph Franz announced additional
investments of more than EUR 400 million in Penzberg to produce antibody tests for the new coronavirus and further R&D activities. The group is also
investing in new business areas including digital
health solutions. In 2020, Roche established its RoX
Health offshoot in Berlin to provide financial andregulatory support to innovative healthcare startups. Germany plays an important strategic role forRoche in both innovation and market terms, withthe country driving many of the group’s innovations and playing a leading role in European market
harmonization in a post-Brexit landscape.
Roche’s strong presence in Germany provides thegroup with access to a strong healthcare market,
an innovative R&D landscape as well as significant
opportunities and benefits within the European
single market. Germany also constitutes the Roche
legal entity for all EU pharma licenses.
Takeda – Providing a Production Advantage
Takeda is a global biopharmaceutical company
headquartered in Japan. Specializing in rare diseases, gastroenterology, oncology, neuroscience,
plasma-derived therapies and vaccines, Takeda is
the largest pharmaceutical company in Japan andone of the world’s top 10 pharmaceutical companies by revenue. Established in Osaka in 1781, thecompany has been active in Germany since 1981.
Takeda currently employs around 2,500 people

at four locations in Germany, with half located in
the Berlin-Brandenburg region and the other halfin Baden-Württemberg. Germany’s position asa world-leading pharmaceutical production sitewith a highly qualified workforce and synergies
with other industries – including the mechanicalengineering sector – provides a major location
advantage to Takeda. The two production sites inSingen and Oranienburg play an important role inthe company’s global manufacturing and supply
network. Almost 2,000 people are employed at
the two production facilities producing high-quality pharmaceuticals for more than 100 countries
worldwide.

“Germany is a world-class location for pharmaceutical production. Our products can only be madeas part of a sophisticated production process thatguarantees the highest level of quality. Germany
provides us with this as well as a highly trained
workforce and excellent infrastructure.”
Heidrun Irschik-Hadjieff
General Manager Takeda Pharma Vertrieb GmbH & Co. KG,
Spokesperson & Member of the Management Board Takeda GmbH

Takeda has invested more than EUR 200 million
in its German production facilities in recent years,
increasing output of its Oranienburg site by 50
percent in 2017. The state of Brandenburg provided
funding of EUR 23 million on top of Takeda’s own
investment of EUR 100 million in Oranienburg. Morethan six billion tablets and capsules are produced at
the facility annually – with 98 percent of production
destined for export markets. In 2019, the company
also opened its first worldwide dengue vaccine
production in Singen. Takeda’s commercial organization in Berlin employs around 500 people. The Berlin
location allows Takeda to network with all important health economy stakeholders – from industry
associations and patient organizations to healthinsurance companies and health policymakers. The
German capital region counts as one of Europe’s
most important healthcare industry locations,boasting a unique concentration of university andnon-university research institutions, clinics andlife science companies.

13

OUR SERVICES

Germany Trade & Invest
Helps You
Germany Trade & Invest’s teams of industry experts will assist you in setting up your operationsin Germany. We support your project management
activities from the earliest stages of your expansion strategy.
We provide you with all of the industry information you need – covering everything from key
markets and related supply and application sectors to the R&D landscape. Foreign companies
profit from our rich experience in identifying thebusiness locations which best meet their specificinvestment criteria. We help turn your requirements into concrete investment site proposals;
providing consulting services to ensure you makethe right location decision. We coordinate site
visits, meetings with potential partners, universities, and other institutes active in the industry.

Our team of consultants is at hand to provide youwith the relevant background information on Germany’s tax and legal system, industry regulations,and the domestic labor market. Germany Trade &Invest’s experts help you create the appropriate
financial package for your investment and put you
in contact with suitable financial partners. Our
incentives specialists provide you with detailed
information about available incentives, support
you with the application process, and arrange
contacts with local economic development corporations.
All of our investor-related services are treatedwith the utmost confidentiality and provided
free of charge.

Our support services for your investment project

Strategy

Evaluation

Decision & Investment

Project management assistanceBusiness opportunity
analysis and market
research

Project partner
identification andcontact

Joint project management with regional
development agency

Coordination and support of negotiations
with local authorities

Cost factor
analysis

Sitepreselection

Site visit
organization

Final site
decision support

Market intelligenceand statistics

Financing & incentives
consultancy

Information on visa
options and labor law

Contact to financial
partners

Market entry
strategy support

Location consulting/Site evaluation
Identification ofproject-specificlocation factors

Support services
Facts on incorporationand taxation

14

Industry Overview 2021/22  |  gtai.com

CONTACT

Investor Consulting
Julia Albrecht is responsible
for the pharmaceutical andconsumer health industryin Germany Trade & Invest’s
Chemicals & Healthcare team.
Julia joined GTAI in 2016,and has already successfully
supported numerous investment projects of international healthcare companies
expanding to Germany. She has gained extensive
international academic and work experience in theUS, Denmark, Spain and Chile and has a master’s
degree from Copenhagen Business School.

Dr. Gregor Kemper is the
project manager responsible
for the biotechnology andbiopharmaceutical industryin Germany Trade & Invest’s
investor consulting division. With chemistry andpharmacy degrees as wellas consulting experience in the pharmaceuticalindustry, he helps companies plan their operations in Germany and make well-informed expansion decissions.

For questions on how to establish your business inGermany please contact Julia Albrecht
julia.albrecht@gtai.com or Dr. Gregor Kemper
gregor.kemper@gtai.com.

Contact us at our headquarters in Berlin:
Germany Trade & Invest
Friedrichstraße 60
10117 Berlin
Germany
T +49 30 200 099-555
F +49 30 200 099-999

For more information about the pharmaceuticalindustry in Germany, please visit our website:www.gtai.com/pharma

Imprint
Publisher
Germany Trade and Invest
Gesellschaft für Außenwirtschaft
und Standortmarketing mbH
Friedrichstraße 60
10117 Berlin
Germany

Picture Credits
Cover: gettyImages/PhotoAlto/Sigrid Olsson
Page 15: Julia Albrecht/Illing & Vossbeck Fotografie
Gregor Kemper/Illing & Vossbeck Fotografie
Notes
All rights reserved ©Germany Trade & Invest,
October 2020

Authors
Julia Albrecht, GTAI; Dr. Gregor Kemper, GTAI

Reproduction, in whole or in part, only permissible
with express prior authorization. All market data
provided is based on the most current market
information available at the time of publication.
Germany Trade & Invest accepts no liability forthe actuality, accuracy, or completeness of theinformation provided.

EditorWilliam MacDougall, GTAI

Order Number
20858

Executive Board
Dr. Jürgen Friedrich, Chairman/CEO
Dr. Robert Hermann, CEO

LayoutDanielle Röbbenack, GTAI
Print
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About Us
Germany Trade & Invest (GTAI) is the economic development agencyof the Federal Republic of Germany. The company helps create andsecure extra employment opportunities, strengthening Germany as
a business location. With more than 50 offices in Germany and abroad
and its network of partners throughout the world, GTAI supports ­German companies setting up in foreign markets, promotes Germany as a­business location and assists foreign companies setting up in ­Germany.
All investment services and related publications are free of charge.

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