Europe loses last antibiotic ingredient plant as production shifts to China

Europe’s final domestic manufacturer of essential antibiotic ingredients is shutting down its largest facility and shifting a portion of its production to China, marking a major setback for EU efforts to reduce pharmaceutical dependence on Asia.

Danish-based Xellia Pharmaceuticals, which has struggled financially, announced that moving part of its operations to its Chinese plant is necessary to stay competitive, Caliber.Az reports via foreign media.

The closure of Xellia’s Copenhagen plant, revealed to employees, will result in the loss of 500 jobs. While a more cost-efficient facility in Budapest will remain operational, the company says the shift is vital to counteract mounting pressure from low-cost Chinese competitors.

Half of Xellia’s active pharmaceutical ingredients (APIs) are featured on both the EU’s critical medicines list and the World Health Organisation’s essential medicines list. Among them is vancomycin hydrochloride, a crucial ingredient in antibiotics used to treat severe, drug-resistant infections like sepsis.

Michael Kocher, Xellia’s CEO, underscored the need for stronger policy support from EU governments to preserve domestic pharmaceutical manufacturing.

“We are discussing so much about reshoring. I think it’s just as important to make sure that what we have in Europe stays in Europe,” he said. 

Currently, about 80 per cent of APIs used in the EU are sourced from China. Kocher warned this could soon approach 100 per cent unless European governments intervene. “Otherwise, not just 80 per cent of the APIs will come from China. It will be close to 100 per cent very soon,” he said.

In March, the European Commission proposed a Critical Medicines Act aimed at ramping up production of over 200 essential drugs. However, Kocher called the measures too slow and timid, urging immediate action: “We are seeking . . . a commitment to support ongoing operations.” 

Xellia, owned by Novo Holdings—the main shareholder of pharma giant Novo Nordisk—sells to over 500 customers in 80 countries. The company says transferring production from Copenhagen will take up to a decade.

Kocher emphasised the strategic importance of the company’s portfolio: “Without our product portfolio, we would be faced with a huge challenge. Covid would be a small issue in comparison,” he said.

By Naila Huseynova