vfa: Fewer foreign direct investments in Germany

Although both the German government and the European Union aim to facilitate investment in pharmaceutical companies with the "Critical Medicines Act" (CMA), important pharmaceutical production continues to be relocated to other countries. A recent example of this is the Danish company Xellia Pharmaceuticals, which relocated the production of an antibiotic active ingredient to China last month .

A report by the Association of Research-Based Pharmaceutical Companies (vfa) also shows that foreign direct investment (FDI) in Germany has declined. Specifically, it fell from 150 billion euros in 2021 to 43 billion euros in 2024. "The conditions of the country's innovative key industries must be improved now," the report states.

FDI refers to cross-border capital investments in which a foreign investor acquires at least ten percent of the shares or voting rights in a domestic company.

The situation is different for foreign capital in Germany. According to the report, this has recently increased. The total value of direct foreign corporate investments in Germany's industrial core has also continued to rise in recent years.

"In total, direct foreign corporate investments in Germany are worth a good €1.3 trillion (as of 2023)," the report states. "This compares to FDI assets of German companies abroad amounting to €1.7 trillion."

According to the vfa, the main targets of foreign investors are mechanical engineering, the electronics and electrical industries, the chemicals, and the pharmaceuticals industries, which even have the highest level of internationalization in terms of ownership structure. According to the association, foreign direct investment plays an important role in the sector, primarily due to the high intensity of research and development.

"Strategic acquisitions of smaller companies or minority stakes to gain access to technologies, production capacities, or the scientific system are therefore becoming much more common."