Eli Lilly and Boehringer Ingelheim pull back investments in Germany over health policy

Boehringer Ingelheim, headquartered in Ingelheim, said on the same Wednesday that it is cancelling 900 million euros in planned investments at German sites, including its Biberach research facility in Baden-Württemberg. The company described the 900 million euro investment cancellation as "eine betriebswirtschaftliche Konsequenz aus der aktuellen Unplanbarkeit von Investitionen im pharmazeutischen Sektor in Deutschland." Boehringer Ingelheim also reached a kind of agreement with the US government to be exempted from pharmaceutical tariffs in return for investments in America.

What the companies announced

Both companies object to higher mandatory rebates that pharmaceutical companies would have to grant to statutory health insurers under the federal government's savings plans. According to the VFA pharmaceutical association's forecast, manufacturer rebates are to rise from the current 7 percent of the list price to around 20 percent by 2030. The pharmaceutical industry has sharply criticized the plans, saying they harm Germany as a business location and undermine the federal government's stated goal of strengthening the pharmaceutical industry as a key sector.

A spokesperson for the Federal Ministry of Health in Berlin called the decisions regrettable, adding that "unternehmerische Entscheidungen gegen den Standort seien bedauerlich. Sie zeigten, dass die Herausforderungen besonders auch wegen der US-Pharmapolitik sehr ernst zu nehmen seien." The same spokesperson said the German market remains attractive for the pharmaceutical industry despite the discussed measures with the savings package for statutory health insurance: "Der deutsche Markt bleibe aber trotz der diskutierten Maßnahmen mit dem Sparpaket für die gesetzliche Krankenversicherung attraktiv für die Pharmabranche."

Berlin's response and the savings law

Health Minister Nina Warken (CDU) wants to relieve health insurers by 16.3 billion euros in 2027 with the 'Beitragssatzstabilisierungsgesetz' (Contribution Rate Stabilization Act). The law aims to prevent rising supplementary contributions and includes stricter austerity requirements for the pharmaceutical industry, including higher manufacturer rebates.

Boehringer Ingelheim said "Während Märkte wie die USA und China ihre führende Position bei der Erforschung und Entwicklung innovativer Arzneimittel weiter ausbauen, sehen wir eine Verschlechterung der Rahmenbedingungen in Europa." The company added that the European market is stagnating and that the GKV savings package "setzten für die Industrie völlig falsche Signale." A number of pharmaceutical companies, including Boehringer Ingelheim, have concluded agreements with the US government to be exempted from tariffs, conditional on investing in production and research in America.

Industry and regional reaction

Karina Szwede, chief executive of the IHK for Rheinhessen, called the announcements "ein Warnsignal für die Industriepolitik insgesamt," saying provisions in the draft GKV Contribution Rate Stabilization Act threaten to undermine planning security. Johannes Heger, president of the LVU Rhineland-Palatinate, noted that seven of the ten highest-revenue industrial sectors in the state had to accept revenue declines in 2025 and that the region has recently experienced a series of postponed investments, relocated production, and job cuts.

Rhineland-Palatinate Economics Minister Michael Ebling (SPD) said the state will engage in Berlin to keep framework conditions for the pharmaceutical industry attractive and predictable. Ebling said Eli Lilly still intends to start operations in Alzey next year and "signalisiert zudem Gesprächsbereitschaft bei veränderten Rahmenbedingungen auf Bundesebene." He urged Berlin to act quickly, warning that "Berlin muss daher jetzt schleunigst handeln, sonst verliert Deutschland Kompetenzen nicht nur als Pharma-, sondern auch als Innovationsstandort insgesamt."

The investments had been politically significant: in spring 2024, German Chancellor Olaf Scholz, Health Minister Karl Lauterbach, and Minister-President Malu Dreyer attended the symbolic groundbreaking for Eli Lilly's Alzey plant, which was originally expected to create up to 1,000 jobs. Eli Lilly CEO Dave Ricks accompanied the politicians at the groundbreaking and later sharply criticized federal policy. The Alzey site lies less than 50 kilometers from Boehringer Ingelheim's headquarters in Ingelheim, putting both decisions within a single regional cluster now facing simultaneous setbacks.