The Czech government has designated the pharmaceutical sector as a strategic industry, aiming to reduce dependence on non-EU imports and support national health systems, avoiding shortages.

In a bid to boost economic resilience and health security, Czechia has included the pharmaceutical industry in its new financial strategy.

“After years of effort and significant support from the Health Ministry, important tools could now be created to support the development of the pharmaceutical industry. This, in turn, will strengthen the national health system and the Czech economy,” said Filip Vrubel, executive director of the Czech Association of Pharmaceutical Companies.

The primary objective of Czechia’s new economic strategy is to position the country among the top 10 EU nations in terms of gross domestic product (GDP) per capita by 2040. This ambitious goal is backed by more than 150 measures focused on areas such as legislation, financing, cooperation with the business sector, and capital market development.

Avoiding shortages

Czechia’s decision to include the pharmaceutical sector in key areas comes at a time when the EU is seeking ways to improve its supply chain for critical medicines. According to a December 2023 report by the European Medicines Agency, more than 200 active ingredients—many of them essential generics like antibiotics—could be at risk of supply shortages.

By boosting its production capacities, Czechia hopes to mitigate these risks. “Supporting the production of critically important medicines is a key agenda not just for Czechia but for the entire EU,” said Jakub Dvořáček, Czech Deputy Health Minister and co-chair of the EU’s Critical Medicines Alliance. “We have a unique opportunity to influence the EU’s approach to industry and to ensure that medicine supplies for patients are secure,” he added.

One of the key motivators behind this policy shift is the EU’s vulnerability to supply disruptions from non-EU countries. Many active pharmaceutical ingredients (APIs) are currently sourced from third countries, particularly India and China. The new strategy aims to reduce this reliance by boosting domestic production capacities.

As the Czech strategy notes, “In connection with the strategic security of the Czech Republic and the European Union, it is a significant task to strengthen self-sufficiency in the production of medicines and active substances.”

Pharma industry’s added value

The inclusion of pharmaceuticals as a strategic sector reflects its growing economic importance. While Czechia’s pharmaceutical sector may be smaller in size compared to the automotive industry, its value is disproportionately high.

The sector generates twice the added value per employee compared to other manufacturing industries, the Czech Association of Pharmaceutical Companies explained. This has a significant impact on public finances, with the industry contributing approximately €650 million to the public budget annually, including corporate taxes and social contributions.

For many in the industry, this shift in government perception is seen as a long-awaited recognition of the sector’s potential.

“The state no longer sees the pharmaceutical industry merely as a provider of medicines, but as a strategic economic sector with high added value, research, and development,” remarked Tomáš Kolář, a member of the board at the Czech Confederation of Industry and director at LINET.

The Czech economic strategy, approved on 10 October, aims to channel investments into high-potential sectors like biotechnologies and advanced pharmaceutical production.

The government also plans to tap into EU-funded programs, including EU4Health and Horizon Europe, to fuel innovations in the sector and strengthen its competitive edge. This strategic inclusion is expected to not only secure medicine supplies but also bolster the nation’s position in the broader European pharmaceutical landscape.

Following the approval of the strategy, the government, in collaboration with key stakeholders, will need to develop detailed implementation plans. These could be presented in upcoming months.

[Edited by Vasiliki Angouridi, Brian Maguire]