Feeling the Pinch

BrAt82 - stock.adobe.com

Despite March bringing in the start of the meteorological spring, northern Europe has been subjected to a late wintery surge, with falling temperatures and cold Arctic air mass (1). This latest drop in temperature is adding to the regional anxiety over soaring energy prices and shortages that have been impacting households, businesses, and industry since 2021 and exacerbated by the Russian invasion of Ukraine in 2022.

Some companies within the European bio/pharmaceutical industry, such as German behemoth Bayer, are being forced to reactivate the use of fossil fuels as a contingency should they be unable to fulfil the heating needs for production (2), even though plans were set out previously to move entirely to renewable energy sources. These types of ‘backward steps’ in terms of energy consumption will be a thorn in the side of the European Commission, which has hopes, as per its Green Deal (3), for the European Union (EU) to be climate neutral by 2050.

And these increasing energy cost pressures could not have come at a worse time, as companies are struggling with other challenges, including the rising demand for medicines, increasing instances of drug shortages, and expanding expenditures in other areas, such as for raw materials, logistics, and regulatory compliance. The generic-drug sector is particularly feeling the pinch, as highlighted by the open letter submitted to EU member states’ energy and health ministers in September 2022 by Medicines for Europe on behalf of its members, iterating the drastic price hikes some companies are facing—10-fold rise for electricity and between 50–160% rise for raw materials (4).

As alluded to by Richard Ettl, CEO of Swiss logistics company SkyCell, in an interview with Pharmaceutical Technology Europe® (which can be found on pages 25–26 of this issue), “Global businesses are entering what some are calling the ‘VUCA’ world—volatility, uncertainty, complexity, and ambiguity.” How should companies respond to these unsure times? They should be gaining visibility throughout the supply chain and taking action as soon as possible (5).

References

1. Hulton, F. and Feist, M. Weather Tracker: Northern Europe Facing Cold Snap. The Guardian, 6 March 2023.
2. Hollinger, P.; White, S.; Speed, M.; Dunai, M. Will the Energy Crisis Crush European Industry? The Financial Times, 19 Oct. 2022.
3. EC. A European Green Deal. https://commission.europa.eu/strategy-and-policy/priorities-2019-2024/european-green-deal_en (accessed 8 March 2023).
4. Burger, L. Europe’s Generic Drugmakers Say They May Cut Output Due to Energy Bills. Reuters, 28 Sep. 2022.
5. Thomas, F. Keeping Europe’s Medicines Stocked. Pharm. Tech. Eur. 2023, 35 (3), 25–26.

About the author

Felicity Thomas is the European/senior editor for Pharmaceutical Technology Group.

Article details

Pharmaceutical Technology Europe
Vol. 35, No. 3
March 2023
Page: 6

Citation

When referring to this article, please cite it as Thomas, F. Feeling the Pinch. Pharmaceutical Technology Europe 2023 35 (3) 6.