Ranked the number one healthcare market in Europe by market volume, patients, manufacturers and providers, Germany’s reputation for life sciences has always been favourable.
With sales of €49.5bn in 2020, the German pharmaceutical market is the largest in Europe and the fourth largest in the world, and this is just one area of many where Germany’s life sciences market excels.
How is Germany’s life science market growing?
In 2020, a record of approximately €40bn was spent on medical devices in Germany, following Germany’s record-breaking €7.8bn on R&D in pharmaceuticals in 2019.
It’s not just medical devices and pharma that Germany has a positive reputation for – German biotech companies secured a record-breaking €3bn in funding in 2020, at a time when Germany’s biotech industry has had growing revenues year-on-year.
Germany’s strong performance in life sciences can be attributed to its highly skilled workforce, of which more than 80% hold a degree or formal vocational training, and its strong infrastructure and proactive approach to innovation in the sector.
Additionally, Germany also benefits from top academic and research institutes and a strong education system, which feed into the wide talent pool available to life sciences companies.
Add in a stable healthcare market and strong support for research and development, and it’s no wonder why Germany continues to lead innovation across life sciences.
Germany’s pharmaceutical market had a 5.1% annual growth over a five-year period (2014-2015), hitting €46.4bn in industry revenue in 2019, making it the biggest pharmaceutical market in Europe.
At a market size value of $44.2bn in 2020, revenue is forecast to hit $65.9bn in 2027, based on historical data.
The country is the largest exporter of medical products and is ranked amongst the top pharmaceutical producers worldwide, which is a continuing trend that is built upon year after year.
Part of what makes the pharmaceutical market such a strong contributor to Germany’s life science market growth is its strong industry base – more than 500 pharmaceutical companies are situated in Germany, from domestic corporations to subsidiaries of international enterprises.
Much of the pharmaceutical sector is made up of SMEs, with around 90% of manufacturers having less than 500 employees, which is a unique element of Germany’s industry.
The growing healthcare market will only contribute further to the already strong growth of pharma in Germany, with a continued rise in expenditure to match growth and factors such as demographic change and the growing prevalence of chronic diseases.
Pharma manufacturing is one area that Germany continues to perform strongly in, alongside the likes of Switzerland – with Germany ranking second in Europe for pharmaceutical manufacturing behind Switzerland – with high production standards due to the high value placed on technology.
Germany’s biotech-related workforce is over 50,000 strong, and funding is resilient in the sector due to the close cooperation between biotech companies and research institutes.
Response to the pandemic was fast in the sector too, in part due to Germany’s support of the international Coalition for Epidemic Preparedness Innovations (CEPI) with €140m in funding.
Diagnostics development in Germany is also strong, with efforts from companies such as Bosch – who developed antibody tests to allow a person’s immune status to be easily tested at lower costs – highlighted during the pandemic and not just being resilient but thriving.
The outlook for biotech in Germany is continually positive, given the additional breakthroughs in scientific and technological areas, such as cell antigene therapies to customise drugs.
As mentioned earlier, investment in German biotech companies exceeded €3bn in 2020, which was three times the previous year’s volume, with continuing high levels of investment contributing to a positive outlook for 2022 and beyond.
Medical devices & Medtech
The global demand for medical technology solutions is high, and in Germany, there have been significant contributions towards enhancing patient healthcare, including medical devices developed through world-class research.
Part of what makes Germany’s approach to medtech so unique is its close collaboration between science and industry, which has continually allowed Germany to set international standards for quality, performance, and safety standards.
Cluster networks are also central to Germany’s medical technology sector, with more than 30 specialised cluster networks focusing on medical technology within Germany working towards continuous innovation in R&D and manufacturing.
What truly fuels this area of Germany’s growth is the specialised approach to medtech, as even within the niche markets, German medtech companies are still considered global leaders and easily adaptable to global market trends.
Add in factors such as high academic uptake, the large talent pool, and competitive labour costs, and it becomes clear why Germany’s medical devices and medtech companies are contributing significantly to Germany’s overall life sciences growth.
The growth of Germany hasn’t occurred out of the blue.
As one of the more mature markets next to the likes of Switzerland and France, Germany has been creating the conditions for their life sciences market to thrive for a long time.
Far from being a high performer in just one area of life sciences, Germany is known as one of Europe’s biggest pharma markets, and a key location for biotech innovation and world-class medtech owing to its strong talent pool of highly skilled life sciences professionals.
Though Germany may not currently hit the record-high levels of biotech investment that the UK and US do, the pandemic has certainly shone a light on Germany’s biotech capabilities, with particular focus on their biotech clusters.
As technology advances, Germany will undoubtedly continue to innovate their approach to healthcare, including the development of personalised medical apps that utilise real-world data, having already begun to utilise their DiGA fast track process for rapid approval and testing of digital health apps.
Few locations have evolved their approach to life sciences quite as quickly or efficiently as Germany, and with the rapid developments that were brought as a result of the pandemic, it is likely that Germany’s life sciences market will continue growing significantly.
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