At the start of 2026, the German Federal Ministry of Health was forced to introduce special regulations and ease imports from other countries because of looming supply problems with the antibiotic benzathine benzylpenicillin (also known as benzathine penicillin G). The move shows, by way of example, how strained the supply situation has become — and how strongly shortages now affect essential medicines. Where exactly is the problem? And what needs to change?

Off-Patent Medicines Hit

In Germany, the Federal Institute for Drugs and Medical Devices (BfArM) systematically records shortages in a publicly accessible database. In recent years, the number of reported cases has been in the range of several hundred products. On March 16, there were 562 entries in the database. Especially affected are off-patent medicines, including antibiotics, painkillers, antidepressants and blood pressure medicines.

The BfArM distinguishes between a “supply shortage” and a “supply disruption”: Supply shortage means a single preparation is temporarily unavailable; supply disruption occurs when no therapeutic alternative is available. The latter is considerably rarer but poses a much greater risk to patient care.

Global Supply Risks

The causes of medicine shortages are varied. They include industrial production processes as well as economic and regulatory frameworks.

A central factor is the heavy globalization of active pharmaceutical ingredient (API) production. Over recent decades, much API manufacturing has been moved to China and India. Production failures at individual manufacturers can quickly have international consequences. If, for example, a plant must be temporarily shut down because of quality problems, there are often no alternative suppliers available to compensate for the shortfall at short notice. In addition, a single API producer often supplies several drug companies at once.

Technical faults in manufacturing processes, difficulties obtaining excipients or packaging materials, and regulatory objections can also lead to a medicine not being released or delivered for some time. Because of strict regulatory requirements, such problems usually cannot be resolved quickly.

Profit Margin Squeeze

Generics are particularly prone to shortages. According to industry associations such as the German Pharmaceutical Industry Association and Pro Generika, economic pressure also plays a decisive role.

Rebate contracts awarded by Germany’s statutory health insurers and intense price competition mean that profit margins for many standard off-patent APIs are very low. (These rebate contracts are agreements between drugmakers and Germany’s public health insurance funds — which cover roughly 90% of the population — that often grant preferred supplier status in return for deep discounts.) Manufacturers therefore concentrate production at a few sites with the lowest possible costs or forgo redundant supply chains for cost reasons. If a production site fails, shortages can quickly result.

Political and Regulatory Approaches

Experts in politics and industry have discussed various strategies for years to improve medicine supply security. An important step was the 2023 law known as the Act to Improve the Supply of Medicines (ALBVVG). The ALBVVG, passed in 2023, obliges manufacturers to provide more extensive reports on impending or existing supply problems to stabilize the supply of medicines, particularly for children.It also directs that supply-security aspects be given greater consideration in rebate contracts used by statutory health insurance funds.

Industry groups also call for broader diversification of API production to reduce dependence on single manufacturers or production regions. Among options under discussion are partial reshoring of API production to Europe or creating strategic reserves for particularly important APIs.

Reasons for Slow Progress

Despite these initiatives and growing political attention, the situation has only improved to a limited extent. That is mainly due to the structure of global drug production. Over decades, companies shifted manufacturing to Asia to cut costs. Building additional production capacity in Europe would require substantial investment and could ultimately lead to higher drug prices.

In addition, pharmaceutical production is heavily regulated. Changes within the supply chain — for example, introducing a new API supplier or using an alternative production site — often need regulatory review and approval. This process can take months or even years and makes quick responses to supply problems difficult.

At the same time, the economic pressure in the generics market remains high. As long as medicines are required to be as cheap as possible, many supply chains will be optimized for efficiency and cost reduction. Redundant production and supply structures that could make supply more resilient, however, entail extra costs.

Simple Solutions, Complex Problem

Drug shortages are less a short-term logistics problem than the result of structural changes in the global pharmaceutical industry. Concentration of API production, economic pressure in the generics market and complex regulatory requirements mean that shortages recur.

Political measures such as the ALBVVG and initiatives to diversify production could help stabilize supply in the long term. However, given the global structure of production, a quick fix is unlikely.

This story was translated from Medscape’s German edition.