Rainer Westermann offers a sobering take on Europe’s declining global status as both a source and recipient of biopharmaceutical innovation. He argues that the time for a paradigm shift in how the EU values innovation is now, calling for pricing system reform, speedier regulatory and HTA procedures, manufacturing investments, and private capital mobilisation to reverse a deeply worrying trend.
As Chairman of the Life Sciences Acceleration Alliance (LSAA), I regularly engage with researchers, entrepreneurs, medical professionals, investors, and policymakers from across Europe. What is striking is that we are all united by a common goal: securing Europe’s position as a leading hub for medical innovation, scientifically rigorous, industrially competitive, socially relevant, and built for the future.
Yet the more I have these conversations, the clearer it becomes that Europe is systematically undermining that very goal.
Policymakers are vocal in their support for building a strong life sciences sector yet remain unwilling to fairly compensate innovation or promote it accordingly. They emphasise the importance of patient benefit, while creating conditions under which the best therapies no longer reach European patients. The gap between political rhetoric and policy reality has never been wider.
Now, additional pressure is mounting from the outside. The Trump administration is reviving the Most Favoured Nation (MFN) pricing principle for the US market, using trade policy to push European countries to increase their pharmaceutical spending. This forces Europe to confront a structural problem that was already critical long before Washington intervened.
The ongoing debate around stabilising statutory health insurance in many member states is once again circling the familiar question: “How can we pay less?” Some approaches under discussion have merit, but the broader conversation remains dangerously one-dimensional. The consequences for future patient care, for domestic life sciences competitiveness, and for long-term economic development continue to be ignored entirely.
Let us be unequivocal: if Europe persists in devaluing innovation through steep price cuts and clawbacks, it will not merely lose investment, it will forfeit its medical future.
Innovation Is Still Treated as a Cost Item in Europe
One of the most persistent misconceptions in European health policy is the notion that innovation is primarily an expense. This logic pervades price negotiations, reimbursement debates, and political messaging alike.
But innovation is not a luxury. It is not a “nice-to-have.” It is the foundation of modern healthcare and a critical economic driver. This is well understood in the US, China, and Japan, and increasingly across regions in the Middle East that are actively and strategically investing in life sciences.
Europe, by contrast, is attempting to sustain medical excellence on a foundation of the lowest prices, maximum control, and extensive government intervention. The consequences are already foreseeable:
– New therapies are arriving later in Europe.
– Some therapies will not arrive at all.
– Value creation is migrating elsewhere.
– Patient access to medicines will continue to deteriorate.
Clinical trials and manufacturing capacities have, to a significant degree, already relocated. This is not a market failure. It is an unambiguous policy failure, rooted in a lack of foresight and an absence of realism.
MFN Pricing: A Concept with Global Consequences
The renewed debate around MFN pricing makes Europe’s predicament acutely visible. If US drug prices are to be benchmarked against the lowest international reference prices of select developed countries, Europe automatically becomes the reference framework, whether it chooses to be or not.
This creates a deeply paradoxical situation: Europe suppresses drug prices to protect its own healthcare budgets, and in doing so becomes a target of US trade policy – with consequences that would directly harm European exports.
For the life sciences industry, this represents a toxic combination of political uncertainty and economic unpredictability – precisely the conditions that deter innovation. No company will prioritise a market where artificially low prices trigger adverse global chain reactions. The result: Europe continues to fall further behind in product launches, with direct and measurable consequences for patient access.
The “Stinginess is Cool” Mentality has led Europe to a Dead End
At LSAA, we do not focus solely on prices and pricing mechanisms – we examine the entire value chain. The picture in 2026 is sobering:
– Europe continues to excel in basic research.
– Europe remains weak in scaling, late-stage development, and manufacturing.
– Europe is heavily dependent on third countries for active pharmaceutical ingredients (APIs) and precursors.
This picture, and the dependencies it creates, is not an inevitability. It is the direct result of years of policy decisions that consistently prioritised the lowest price over resilience and innovation capacity.
And yet, there are still compelling examples that prove European research can deliver life-saving innovation at a global scale. Companies such as BioNTech and Evotec are tackling some of the most pressing diseases of our time. But we must also be honest about how difficult it is for even these flagship companies to achieve meaningful long-term planning security within the European environment. Scientific excellence alone is not sufficient. Without fair valuation, without an industrial strategy, and without political courage, even the best science will come to nothing.
Patients are Paying the Highest Price
At LSAA, we do not think purely in terms of industry metrics. We think about what truly matters: people and their health.
It is already a reality that European patients wait longer for innovative cancer therapies, lack access to certain gene therapies, and face supply shortages of established medicines. We must not only stop this trend; we must reverse it.
A system that systematically devalues innovation does not deliver fairness. It delivers scarcity. If this trajectory continues, Europe risks a two-tier global healthcare divide: at the top, markets that enable and attract innovation; at the bottom, those that regulate it into irrelevance, delay it, and ultimately lose it altogether.
What Needs to Happen Now – Clear Expectations for Brussels and EU Member States
The time for yet another strategy paper is over.
Innovation must be valued fairly. The existing system was designed to contain healthcare costs and cap prices. It was not designed to incentivise industry or ensure patient access to the most effective treatments. That design flaw must be addressed.
Europe needs speed. This means faster HTA procedures, genuine market harmonisation, and a meaningful reduction in national exceptions and fragmentation.
Europe needs a fundamental shift in mindset. Life sciences are not a cost factor – they are a strategic investment in the future. Pricing mechanisms across member states must be comprehensively re-evaluated and realigned with this reality.
Industrial resilience must become a political priority. Manufacturing capacity, active ingredients, and key technologies must return to Europe. Strong IP protections and clear investor incentives are not optional – they are prerequisites for an attractive and competitive environment.
Private capital mobilisation is essential. Without large-scale venture funds and long-term financial mechanisms to support scaling within the EU, we will see fewer innovative companies and a shrinking number of success stories originating in Europe. Public funding has its limits. The EIB’s initiative to mobilise €10 billion in investment through 2026–27 is a welcome step, but it cannot substitute for private capital or a deep, liquid, pan-European capital market.
The Biotech Act 1, the EU Pharma Legislation as well as other acts and EU initiatives are moving in the right direction but often contradict themselves, are too much dependent on national implementation and take too long altogether.
Nothing is lost yet. But time is not on our side. If Europe is serious about its innovative potential, it must act. Not tomorrow, not after the next election cycle, but now.
Rainer Westermann, Chairman of the Life Sciences Acceleration Alliance (LSAA).
