Europe, once the primary hub for global pharmaceutical research and development, is experiencing a significant decline in its market share due to aggressive U.S. trade policies and the rapid growth of China's biotech sector [1]. Over the past 35 years, Europe's share of global R&D has been halved, with more pharmaceutical companies prioritizing investments in the U.S. and China [1]. According to ING research, in 1990, nearly half of global R&D was conducted in Europe, while about a third was in the U.S. Today, the U.S. commands 55% of global R&D, and Europe's share has dropped to 26% [1].
The shift is attributed to several factors, including U.S. tariffs and the implementation of a 'most-favored-nation' drug pricing model, which sets the price of a drug in the U.S. to the lowest price paid by another comparable country. This policy has created urgency and given pharmaceutical companies leverage in negotiations with European governments and regulators, according to ING healthcare analyst Diederik Stadig [1]. Additionally, Washington's focus on biotech and supply chains as national security issues has led to an emphasis on keeping medicine supply chains within the U.S. [1].
China's rise as a biotech leader is also reshaping the global pharmaceutical landscape. Global pharmaceutical companies are increasingly looking to China for innovation and potential blockbuster drugs. Ten years ago, Chinese-developed molecules made up just 4% of the global pipeline; today, they account for nearly a third, according to ING [1]. China has secured major deals with global pharma companies to access early-stage science, further cementing its position as an innovation engine in the industry [1].
Europe's declining competitiveness is not only an economic issue but also affects the launch of critical medicines, as pricing and regulatory challenges discourage companies from introducing new drugs on the continent [1]. Fragmented capital markets, single-market adoption on pricing and clinical trials, and uneven reimbursement policies have long been cited as obstacles by industry players [1].
CONCLUSION
Europe's pharmaceutical sector is losing ground to the U.S. and China, driven by shifting trade policies and innovation trends. The decline in R&D investment and market share signals a high-impact change for the industry, with implications for drug launches and global supply chains. Companies and regulators may need to address these challenges to restore Europe's competitiveness.