Roche halts further investment decisions in Germany over drug pricing reform

Swiss pharmaceutical group Roche said on Monday it is pausing expansion in Germany, a blow to Berlin just as a government-backed investment summit opened in the capital. The event aims to attract business interest in Europe's largest economy.

Daniel Steiners, head of Roche Germany, told the newspaper Die Welt that the company has put all future investment decisions in the country on hold for now. In his words, recent political decisions have badly damaged trust in the pharmaceutical sector.

What triggered the dispute

In July, German lawmakers passed a law requiring drugmakers to cut prices, part of an effort to contain costs in the country's statutory health insurance system. From next year, manufacturers must grant a 15.5% rebate on most branded medicines, up from 7% at present.

In June, the United States pointed to these reforms when it opened a tariff investigation into Germany. Washington said Berlin persistently underpays for innovative pharmaceutical products.

Reaction from government and business

Asked about Steiners' remarks, Economy Minister Katherina Reiche said the measures were needed to keep social security contributions in check. She also praised the pharmaceutical industry's enormous contributions.

The summit in Berlin runs on Monday and Tuesday. Germany's economy is struggling with weak domestic demand, US tariffs and growing Chinese competition abroad, and it has posted little growth since the burst of pent-up pandemic demand at the end of 2022.

Speaking alongside Reiche at a press conference, Roland Busch, head of industrial group Siemens, called Roche's announcement a signal. He said companies are concluding that if investment conditions in Germany are not right, they will simply invest elsewhere, which he described as understandable.