Czech Government Designates Pharmaceutical Industry as Key Sector to Address Drug Shortages and Reduce Dependence on Non-EU Countries

The Czech government has officially identified the pharmaceutical industry as a strategic industry in a move aimed at reducing dependence on non-EU imports, strengthening the national health system and preventing potential drug shortages.

To strengthen economic resilience and improve health security, the Czech Republic has included the sector in its latest financial strategic plan.

Philippe Vrubel, Executive Director of the Czech Association of Pharmaceutical Companies, said: "Thanks to many years of unremitting efforts and the support of the Ministry of Health, we have now put in place a key support system to enable the pharmaceutical industry to flourish. This will further strengthen the national health system and help the Czech economy to a new level."

The central vision of the Czech Republic's new economic strategy is to place its per capita gross domestic product (GDP) among the top ten EU member states by 2040. This ambitious goal is supported by more than 150 concrete measures covering a number of key areas, including legislation, financing, cooperation with the business community and capital market development.

In view of the fact that the EU is working to optimize its key drug supply chain, the Czech government has decided to include the pharmaceutical sector as a key area. According to a report released by the European Medicines Agency in December 2023, more than 200 active ingredients, including many basic generic drugs such as antibiotics, are facing serious challenges in supply shortages. The Czech government hopes to effectively mitigate these risks by increasing domestic production capacity.

Jakub Dvo R? ek, Czech Deputy Minister of Health and co-chair of the EU Alliance for Critical Medicines, stressed: "Ensuring the stable production of critical medicines is not only a priority for the Czech Republic, but also a common agenda for the whole EU. We have a unique opportunity to lead changes in EU industrial policy and ensure that patients have access to a safe and reliable supply of medicines."

One of the deeper motivations for this policy shift is that the EU currently relies heavily on the supply of drugs from non-EU countries, with potential disruption risks. Many active pharmaceutical ingredients (apis) originate primarily from third countries, particularly India and China. The new strategy therefore focuses on boosting domestic production capacity to reduce this dependency.

The Czech strategy clearly states: "Strengthening self-sufficiency in the production of medicines and active substances is a crucial task in safeguarding the strategic security of the Czech Republic and of the European Union."

The inclusion of the pharmaceutical industry in the strategic sector highlights its growing importance in economic growth. Although the Czech pharmaceutical industry may not be on the same scale as the automotive sector, it generates significantly more economic value. According to the Czech Association of Pharmaceutical Companies, the pharmaceutical industry generates almost twice as much value added per employee as other manufacturing industries. The sector also makes a significant contribution to the public finances, bringing in around €650 million a year to the public budget, including corporate taxes and social contributions.

For many in the industry, this shift in government thinking signals recognition of the industry's huge potential. Toma? Kola, member of the board of directors of the Czech Federation of Industry and director of LINET, said: "The state no longer views the pharmaceutical industry only as a provider of medicines, but as a strategic economic sector with high added value and emphasis on research and development."

The Czech economic strategy, approved on October 10, aims to direct investment to sectors with high growth potential, such as biotechnology and advanced pharmaceutical production. The government also plans to use EU-funded projects such as EU4Health and Horizon Europe to drive innovation in the sector and enhance its international competitiveness. The implementation of this strategy is not only expected to guarantee a stable supply of medicines, but also to further enhance the Czech Republic's overall position in the European pharmaceutical sector.

After the strategy is approved, the government will work closely with key stakeholders to develop a detailed implementation plan. The plans are expected to be announced in the coming months.