Read the Conversation
Meeting highlights:
- Regulatory Modernization and Self-Care Advocacy: Dr. Kroth emphasizes modernizing outdated frameworks for OTC and switcher products to empower patient self-care and maintain market dynamism in Germany.
- Strengthening Supply Chains and Local Production: He advocates for flexible procurement strategies, incentivizing European production of essential medicines, and reducing dependency on Asian suppliers to enhance supply chain stability.
- Sustainability and Environmental Responsibility: Promotes industry-led sustainability initiatives, such as the Sustainability Prize, and addresses challenges like the wastewater treatment directive and packaging materials.
- Workforce Development and Industry Growth: Highlights the need for skilled specialists, including international talent, to support the growing pharmaceutical sector and address rising costs and workforce shortages.
- Strategic Importance of the Pharmaceutical Sector: Calls for greater political focus on pharmaceuticals as a key driver of Germany’s economy, urging balanced support for innovative and generic industries to foster resilience and growth.
EF: Could you give us a brief overview of your top priorities, how you identify them, and how you plan to tackle them?
EK: First, since our roots are in the self-care sector, our focus is promoting self-care and empowering patients to take charge of their health. Self-care is vital to any modern healthcare system because it gives patients more control and autonomy over their well-being. To support this, we need a more flexible framework. In Germany, the rules for self-care, especially for products to switch from prescription-only to pharmacy-only, are very rigid and have remained unchanged for 45 years. Such products are essential for keeping the market dynamic, but the current system limits their potential. Modernizing this framework is a key priority for us.
Second, with the transition from BAH to Pharma Deutschland, we're embracing a broader role to represent the entire pharmaceutical market in Germany. This includes everything from OTC products and homeopathies to highly innovative medicines like ATMPs. However, the AMNOG system for early benefit assessments, which determines innovation prices, needs improvement. To support new advancements and maintain Germany's competitive edge in Europe, Germany must adopt the AMNOG system. Rather than a complete overhaul, it's about gradually evolving the system to align with current and future needs.
The third priority concerns addressing shortages in the job and other European markets. We need solutions to avoid these shortages and secure robust supply chains. We have faced challenges like other European countries, which makes improving our pharmaceutical supply throughout Germany a priority. To tackle this, we're exploring flexible procurement strategies and market-based solutions. Market-based approaches are important because government intervention is not the answer. Instead, we propose promoting essential medicines within Europe, supported by incentives. Pricing shouldn't be the only factor; we must also consider production location as a second important criterion.
Our fourth priority is adapting the Urban Wastewater Treatment Directive (UWWTD), which will place a massive financial burden on the pharmaceutical industry. In Germany, the cost of upgrading wastewater facilities to reduce micro-pollution exceeds €2 billion annually, equivalent to the entire generic pharmaceutical market's value. This hits generic producers the hardest since older substances are often more eco-toxic than newer biotechnology products. If this directive is enforced in its current form, it could severely impact the generic market.
We need creative strategies for safer water that don't place such a heavy burden on just two industries: pharmaceuticals and cosmetics. Many sectors like the chemical, agriculture, traffic, and energy sectors also contribute to micro-pollution, but they are not held accountable. It makes the imbalance unfair and poses a risk that it could disrupt supply chains and markets. Therefore, addressing this unfairness and finding a balanced approach to avoid further shortages is crucial.
EF: How do you assess the impact of the national pharmaceutical strategy? More specifically for your members, is there a difference in perception of the strategy between the OTC, generic side, and the innovative side of things?
EK: From a broader perspective, we're finally happy to have a national pharma strategy. For many years, there wasn't a clear focus on the pharmaceutical industry, while sectors like automotive and chemicals seemed to get more political attention. The pharmaceutical industry is one of the most thriving sectors in Germany, especially compared to the challenges the automotive industry has faced in recent years. While the automotive sector excelled in traditional manufacturing, it has struggled to adapt to the shift toward e-mobility. Conversely, the pharmaceutical industry has been growing because of the strong ecosystem of global players, mid-sized companies, and innovative research-based organizations and the support they bring. Healthcare overall is Germany’s largest industry, encompassing hospitals, physicians, pharmacists, nursing homes, and other service providers. It’s a growing sector with increasing income and demand. However, like other industries, we face rising energy costs, price increases, and workforce shortages. We need more skilled specialists, including talent from outside the country, to address this.
We’re pleased to be part of discussions with the government to address these issues. The pharma strategy process has been constructive, bringing fresh ideas and valuable insights. Even in legislation, introducing the Medizinforschungsgesetz (Medicine Research Act) is a positive step. While it’s just the beginning, it lays the groundwork for further progress. As the saying goes, every journey begins with the first step, and we’re optimistic, but there’s still much work to be done. This sentiment is shared across the industry, as everyone recognizes the need for continued effort to build on these advancements.
EF: Could you give us an overview of how you bridge the gap between the needs and requirements of the companies you represent and EU-level decisions?
EK: Generally, we're represented in Brussels by our umbrella organization, AESGP, which primarily focuses on OTC products. Historically, we were well-represented there, but since 2004, when OTC products were excluded from reimbursement, we expanded our focus to representing the entire industry within Germany. This shift required us to adapt, particularly regarding how we engage with Brussels and what our members want to bring to the table.
We’ve built strong relationships with German members of the European Parliament (MEPs) to strengthen this connection. We’re in regular discussions with them to ensure our concerns are heard. Over time, it’s become clear that legislation coming from Brussels carries more weight than national laws, so it’s crucial to work through European institutions like the Parliament, the Commission, and the Council. While we handle day-to-day conversations with our national representatives in the Council, engaging with the Commission and Parliament members requires a more structured approach. This need for better coordination is why we decided to open our office in Brussels. Having a local presence means we can participate in discussions more effectively. It’s far more practical than driving two hours back and forth for events or meetings about being on the ground where decisions are made.
Regarding Brussels’ agenda, we’re actively involved in discussions on the new pharma review, the Green Deal, sustainability initiatives like CSRD, CSDDD, deforestation regulations, and countless other topics. Being closer to these processes is vital for Germany, so establishing our office and collaborating with local organizations in Brussels has been an important step. It keeps us connected and engaged with the key issues shaping our industry.
EF: Could you give us more details on how Pharma Deutschland promotes a real preventative approach?
EK: We're in daily discussions with pharmacist organizations to encourage them to better support and promote OTC products in their business. More than half of the packages sold in German pharmacies are OTC products, and about two-thirds of our products are either OTC or non-medical items. This highlights the significance of OTC products to a pharmacist's business, which is why we work hard to emphasize the importance of OTC products and encourage pharmacists to prioritize them.
On the political side, we're advocating for improvements to the regulatory framework for product switches. The process is overly complex, time-consuming, and often unpredictable, making it challenging to achieve profitable outcomes. Streamlining this process is one of our key recommendations to policymakers. We're also strong supporters of local pharmacies and often run campaigns to highlight their role as trusted points of contact where patients can receive advice and access safe products. Systems like Securpharm, which prevent product falsification, further strengthen the connection between these institutions and patients.
Another important topic is prevention. Although there was a legislative proposal to enhance prevention efforts, such as increasing vaccinations, promoting nicotine replacement therapies, and expanding access to statins, this didn't move forward due to the current government's term ending. It will now be up to the next government to decide whether to pursue these approaches. These discussions are all part of our efforts to create a better environment for pharmacists and patients, focusing on safety, trust, and streamlined processes.
EF: What comes to mind when you reflect on the proudest moments in the past 30 years you have been part of the association?
EK: In 30 years, I’ve taken on several roles. I started in 1994, splitting my time between research, innovation, and drug safety, now called pharmacovigilance. One of my proudest achievements is being part of the implementation of new pharmacovigilance legislation. During the last pharmaceutical review in the ’90s and early 2000s, I was responsible for key areas like PSURs and electronic adverse drug reporting. It was a significant journey, and we established many important services then. Recently, we faced another ground-breaking EU pharmaceutical law review.
Another highlight of my career is our growth at BAH, now Pharma Deutschland. With 400 member companies and 55 colleagues, we've become a major think tank for the pharmaceutical industry in Germany. We guide companies by staying ahead of emerging trends, especially through our involvement in European discussions with the EMA. For example, we've proactively addressed sustainability and environmental issues, becoming frontrunners in Germany for these topics. We aim to help companies prepare for what's coming, avoid potential risks, and turn challenges into opportunities.
We're not just advisors to companies but also politicians, thanks to our comprehensive 360° perspective. We represent research-based, OTC, and generic companies, which means we tackle many issues. Building an internal consensus can be challenging, given the different priorities across these sectors. However, our credibility with policymakers and authorities will be exceptionally strong when we achieve it. Lastly, I’m proud of the trust we’ve earned. Our advice isn’t just about lobbying; it’s research-driven and reasonable. This credibility sets us apart, making our contributions valuable to the industry and policymakers.
EF: Are there any specific collaborations from the association or the members with success stories of how Germany thrives in this sector?
EK: Our Sustainability Prize, launched in 2022, is a recent example of industry collaboration. The goal is to inspire companies by showcasing best practices, using or generating energy from natural resources, improving processes to avoid energy waste, and pursuing strategic goals like B-Corp certification. These efforts address various aspects of sustainability and have significantly impacted the industry. No one benefits from energy waste, so we've also had discussions with politicians, leading to topics like changing packaging materials. Non-recyclable packaging is banned in the food and other sectors, but it's more common in the pharmaceutical industry. Our packaging has critical functions, such as protecting products from moisture and micropollutants, which makes sustainability a bigger challenge.
One example we're proud of is the green prescription initiative. It addresses the gap where physicians recommend OTC products but cannot prescribe them formally. Patients often forget these recommendations, so the green prescription bridges the gap. It looks like a standard prescription, like a red prescription for prescribed medicines, but is used for OTC products. About 90% of patients with a green prescription present it at the pharmacy and purchase the recommended product alongside their red prescription. This is a great example of the collaboration between industry, pharmacies, and physicians. It highlights how partnerships among all three stakeholders can create meaningful solutions that benefit everyone.
EF: Is there any final message, recommendation, or reflection on your work you would like to share with our readers?
EK: The most important thing is reminding politicians that the pharmaceutical industry is a key part of Germany’s economy and innovation. While Germany is often seen as an automotive hub, the health sector, specifically the pharmaceutical industry, deserves greater focus. Unlike the automotive sector, where innovation is declining, the pharmaceutical industry has enormous potential to grow and flourish with the right framework. With its 84 million people, abundant physicians, pharmacists, and hospitals, Germany has the resources to excel. However, clinical trials and other areas have been declining in recent years. To reverse this, politicians must prioritize the health sector, not just financially but holistically. Always seeking the cheapest solutions is not sustainable; we need a smarter approach that builds resilience.
Currently, 70–80% of active pharmaceutical ingredients (APIs) are produced in India and China, making us heavily dependent on Asia. In order to achieve this, our primary goal is to maintain existing production facilities in Germany. Therefore, the financial framework and, ultimately, drug prices must be improved. If this is successful, options for relocating production facilities to Germany and Europe can be considered. Lastly, both innovative and generic industries are essential. It’s not about choosing one over the other; they complement each other. Supporting one at the expense of the other is a mistake. We need policies that enable both to thrive because both are critical to the pharmaceutical ecosystem.
