German healthcare reforms raised pressure on pharma and hospital stocks as Berlin targeted €40bn deficit

Germany proposed sweeping healthcare cost-cutting reforms aimed at reducing a projected €40 billion deficit in the country’s public health insurance system, raising concerns across the pharmaceutical and healthcare sectors.

The reform package introduced by Chancellor Friedrich Merz’s coalition government sought to tighten drug pricing rules and reduce healthcare spending within a system costing more than €500 billion annually.

Under the proposals, pharmaceutical companies would face higher mandatory rebates beginning in 2027, while insurers would gain greater authority to group similar patented medicines together to encourage use of lower-cost treatments.

Industry groups warned the measures could place significant pressure on profitability and investment within Germany’s pharmaceutical market. Han Steutel, president of German pharmaceutical lobby group VFA, said the reforms could have the “worst impact” the industry had seen so far and warned they may push jobs and investment abroad.

The uncertainty also increased concerns around Europe’s competitiveness as pharmaceutical companies simultaneously faced pricing pressure from the United States.

Some companies had already begun reacting to the proposed reforms. Insmed reportedly decided against launching a new lung treatment in Germany, while executives at Boehringer Ingelheim warned that launching innovative medicines in Europe was becoming increasingly difficult.

The reforms also targeted hospitals through plans to limit reimbursement growth and introduce additional oversight for common procedures.

Healthcare stocks came under pressure following the proposals, with shares in Fresenius SE falling roughly 20% since February amid broader concerns over reimbursement changes and healthcare spending reductions.