Arkadi Sharkov: European Pharmaceutical “Onshoring”: Central and Eastern Europe’s Chance to Build Strategic Autonomy

When hundreds of pharmacies in Plovdiv, Banja Luka, or Debrecen posted “Out of Stock” signs during the pandemic, Europeans realized how long and fragile the chain is for a single amoxicillin tablet to reach a patient. The active substance is synthesized in Hebei, the intermediate product is granulated in Andhra Pradesh, and the final formulation is done in Rotterdam. This geography is not merely a business matter; it has become a risk to the health and national security of the Union.

The New Political Equation.

On March 11, 2025, the European Commission presented the Critical Medicines Act—a package with the ambition that by 2030, at least 50% of strategically important medicines and their active ingredients will be produced within the EU (European Commission, 2025a). The measure comes at a time when more than 80% of antibiotic APIs in Europe are imported from Asia, primarily China (Reuters, 2025a). However, Brussels is not acting in a vacuum. Washington has moved from rhetoric to industrial policy: in June 2024, President Biden signed an executive order for a White House Council on Supply Chain Resilience, which can activate federal procurement in favor of companies returning critical pharmaceutical manufacturing to American soil (Reuters, 2024). India has expanded its own PLI scheme—in March 2024, 27 new projects for raw substances and antibiotic fermentations were inaugurated in New Delhi (Press Information Bureau, 2024). Meanwhile, China is “export-diversifying” its production by purchasing fermentation capacities in Latin America and Africa to minimize potential Western sanctions. In response to this geopolitics, the European Commission adopted the Economic Security Strategy in 2023, introducing the concept of “open strategic autonomy”—a purposeful shortening of dependencies without closing markets (European Commission & High Representative, 2023). In other words: the EU wants to remain globally connected but reduce points of vulnerability.

Why specifically CEE and the Balkans?

The region offers a triple dividend:

1. Economic – labor costs are on average one-third lower than those in Western Europe, and thanks to new renewable energy parks, industrial electricity is already 15–20% cheaper than in Germany.

2. Historical – Slovenia, Hungary, Poland, Bulgaria, North Macedonia, and Serbia have a long tradition in generic medicines. These factories can be renovated relatively quickly for modern biological substances.

3. Logistical – although it is the “periphery” of the EU, the region is within a two-day truck drive from major markets in Germany and France, and the Danube–Black Sea river-sea axis provides an alternative route entirely internal to the Union.

Recent investment flows are already outlining a trend. In 2023, the European Investment Bank allocated a record €4.1 billion to Romania, with a priority area being the capacity increase of the local manufacturer Antibiotice—a signal that public funds are being directed toward the life cycle of inexpensive but vital molecules (European Investment Bank, 2024). Meanwhile, Poland’s Polpharma Biologics entered into a strategic alliance with China’s Chime Biologics in April 2025 for large-scale production of biosimilar medicines in Gdańsk—proof that CEE can attract, rather than export, Asian expertise (PR Newswire, 2025).

The Strategic Value of “Onshoring and Friend-shoring”

Relocalization is not just a patriotic idea. It has four dimensions for competitiveness:

• Reduction of geopolitical risk – supply chains shortened to 800–1,000 km are more resilient to military or trade blockades.

• Reduction of working capital – for generic pills produced entirely within the EU, inventory levels can be reduced by more than one-third, directly improving companies’ cash flow.

• Lower carbon footprint – a study in Sustainability shows that transport and warehouse logistics account for up to a quarter of the total emissions of a typical pharmaceutical chain; returning production to a 1,000 km radius reduces this share by 20–30% (Brehmer & Lu, 2024).

• Innovation cluster effect – when R&D and manufacturing are physically close, knowledge merges faster; this was evident in the rapid effort by German and Hungarian teams to scale an mRNA vaccine in 2021.

What is Brussels doing besides the CMA?

• HERA Invest – a €100 million financial instrument that has already supported the French company Fabentech with €20 million for broad-spectrum antitoxins. The scheme is also open to SMEs from CEE (European Commission, 2024).

• EU FAB – a network of “ever-warm” facilities that, in exchange for annual readiness, can be switched to crisis mode.

• Revision of general pharmaceutical legislation – the project proposes that state tenders for generics include criteria for sustainability and security, rather than just the lowest price. This is crucial because the current “race to the bottom” makes European production economically unviable.

Challenges

1. Demographics – the region is losing qualified personnel. If the migration wave is not reversed by 2030, new factories will be searching for technologists who are already working in Bochum or Lyon.

2. Regulatory fragmentation – countries like Serbia and Albania have not yet fully synchronized their GMP standards with the EU, which prolongs procedures.

3. Price pressure – even after the CMA, the question remains as to who will pay the premium for “Made in EU.” Without Advance Purchase Agreements (APC), private capital will find it difficult to take the risk for antibiotics, where margins are low.

4. Energy insecurity – despite the rapid adoption of renewables, gas contracts in Romania and Bulgaria are still indexed to volatile spot prices.

Policy Recommendations

• European tax credit similar to the Advanced Manufacturing Tax Credit in the US – for example, 20% of capital expenditures for API investments.

• Regional skill centers – a joint Balkan Institute of Pharmaceutical Engineering, where universities from Niš, Plovdiv, and Craiova can train operators and validators for GMP facilities.

• Integration of candidate members – access to HERA and EU FAB in exchange for accelerated harmonization of regulatory regimes.

Conclusion: A Five-Year Window of Opportunity

History recalls that in 1944, the first European penicillin factory was located precisely in Central Europe—in Banská Bystrica. Eight decades later, the region is once again at a crossroads. If the EU implements the Critical Medicines Act and directs capacity and capital toward CEE and the Balkans, the Old Continent can regain its autonomy without becoming isolated. If we miss the moment, we risk remaining an “intellectual pharmacy”—where molecules are invented, but we wait for a container from Shanxi to produce them. The choice is European, but the opportunity lies closest to the Danube, Tisza, and Vardar.