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German Life Sciences Outlook – What Are the Market Trends?

27 October 2022

By The Marketing Team

German Life Sciences Outlook – What Are the Market Trends?

Life sciences is an essential economic industry in Germany.

In Europe, Germany is ranked second – behind the UK – for the number of companies in the life sciences segment, with a number of recognisable clusters in Berlin, Hamburg, Frankfurt, Munich, the Ruhr region, and Heidelberg.

Leading life sciences companies are also based in Germany, such as Bayer AG and Merck, driving further development of research facilities and education systems to encourage even further growth in the sector. 

As the largest life sciences market in Europe, with over 330,000 employees across nearly 2,100 companies, Germany is certainly a powerhouse in the industry.

But which trends are impacting German life sciences?


Specialism in fields of research

Many regions are associated strongly with certain specialisms, and Germany is no different.

Areas such as molecular biology, medicine, and diagnostics have been developing areas of expertise for the region.

For example, the headquarters of the European Molecular Biology Lab (EMBL) is based in Heidelberg, providing molecular biology research with units dedicated to cell biology, biophysics, genome biology, and computational biology.

Germany’s innovative approach to research is also beginning to cover areas such as digital healthcare, with the passing of the E-Health Act of 2016 and the Digital Care Act of 2019, demonstrating the continued interest and investment in the area.

Part of the reason behind this trend comes from the increasingly ageing society in Germany, alongside the rise in lifestyle diseases – combatting disease patterns has led to a rise in individualised medicine and a preventative approach to healthcare.


Digital health

As mentioned above, an emerging trend in German life sciences is the advancement of digital health, including the rise of wearables and medical apps.

The use of personalised medical apps has meant that German pharmaceutical companies have huge amounts of real-world data to use that has the potential to impact diagnosis and treatment.

The German government has created a digital health app fast track process – known as the DiGA Fast Track Process – for rapid approval, testing, and reimbursement of digital health apps.

Medical apps that are classified as class I and IIa medical devices can be listed in the DiGA directory for reimbursable digital health apps, after the completion of a three-month assessment period.

This would make their apps immediately available to an estimated 73 million patients in the largest European healthcare market. It’s clear that digital health apps are going to be central to the wider digitalisation in German healthcare.


Leading life sciences clusters

Germany is hardly short of impressive regions at the forefront of innovation in life sciences.

This includes the ‘Big 7’: Berlin, Düsseldorf, Frankfurt, Hamburg, Cologne, Munich and Stuttgart.

Berlin is arguably the most important life sciences cluster in Germany, with around 300 companies in the area and a high density of universities and colleges – the transaction volume involving life sciences real estate in Berlin totalled€634m from 2017 to 2021.

As a cluster, Berlin attracts both highly skilled workers and investors to the area, with well-developed infrastructure and neighbouring cities that are growing, such as Potsdam.

Another leading life science cluster in Germany is Munich, with 230 companies, a 32,000-strong workforce, and a strong startup presence, owing to its two biotech innovation and startup centres in Martinsried and Freising. 

As with Berlin, Munich also has strong academic and research links, with two elite universities – Ludwig-Maximilians-Universität and Technische Universität München – two university hospitals, and three biological/medical Max Planck Institutes.

These clusters are dynamic, with rising numbers of startups and an emphasis on areas such as personalised medicine and immunotherapy.

From a recruitment perspective, this places Germany as a prime location, due to the high number of graduates of life sciences programmes, making them highly sought-after specialists.


Effective and compliant supply chain management

Global supply chain disruptions were rampant during the pandemic, alongside debates around the sustainability and environmental impact of supply chains, making it a key area of focus in Germany.

In June 2021, the German Federal Parliament passed the Law on Corporate Due Diligence in Supply Chains (LkSG), which will come into effect on 1st January 2023. This will be applied to companies located in Germany and foreign companies that employ a minimum of 3,000 employees in the country.

By January 2024, this threshold will be lowered to companies with 1,000 employees.

This law promotes due diligence on companies to comply with human rights and protect the environment, putting the responsibility on companies to operate ethically throughout their supply chain.

Under this law, companies will be expected to conduct a risk analysis to identify risks in their supply chain, documenting the process.

This is a huge step forward in ESG efforts, as companies are now liable to fines of up to 2% of average annual global sales/turnover for non-compliance. Companies are also kept accountable by their due diligence obligations, which include the publication of an annual report on any risks of violations, and steps the company has taken to address them.

The EU Supply Chain Sourcing Obligations Act is another example of the shift towards managing the social and environmental impact throughout supply chains.

This law aims to ensure that businesses operate ethically by complying with human rights standards to promote a fairer, more sustainable global economy.

Once the draft is approved by the European Parliament and Council, EU member states will have a period of two years to put this directive into their national laws.

In short, Germany is far ahead of the curve with their approach to ESG.


The future is bright for German life sciences

Few regions are quite as innovative, dynamic, and forward-thinking as Germany in the life sciences industry.

With such a vast array of businesses, specialisms, and highly effective life sciences clusters, Germany is considered an industry leader for many reasons. With digital health and ESG already being key considerations on an industry-wide scale, Germany is setting the benchmark for successful legislation and approaches to the most relevant areas.

The future isn’t just looking successful for Germany; it’s looking to be a period of redefining the way that life sciences operates and how it can improve over time.


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