Europe’s Biosimilar Market Needs Reforms for Sustainability

Why Europe’s biosimilar procurement model needs urgent attention

Europe’s biosimilar market has delivered substantial savings to healthcare systems across the continent. However, the procurement practices underpinning these savings now threaten the very supply chains they depend on. Rigid lowest-bid tendering is pushing manufacturers to unsustainable price points, creating consolidation risks and structural vulnerabilities that could undermine patient access to critical medicines.

For UK businesses operating in pharmaceutical manufacturing, distribution, or healthcare procurement, these European dynamics matter. Supply chains cross borders. Regulatory frameworks increasingly align. Moreover, the procurement reforms now gaining traction in Brussels offer practical lessons for UK public sector buyers navigating similar tensions between cost control and supply security.

The central problem is straightforward. As biosimilar markets mature, competitive pressure intensifies. Tendering authorities focus overwhelmingly on price, awarding contracts to the lowest bidder. Manufacturers respond by cutting costs wherever possible. Initially, this delivers savings. Over time, it erodes the financial capacity needed to maintain facilities, invest in environmental compliance, and weather supply disruptions.

This creates a paradox. The procurement model designed to maximize short-term savings actively undermines the long-term viability of the supply base it relies upon. Consequently, the sector faces growing calls for reform that balance cost efficiency with supply resilience.

How biosimilar markets have evolved across Europe

Biosimilar markets typically progress through distinct phases. Initially, manufacturers invest heavily to enter the market and establish production capacity. As competition increases, the focus shifts to expanding market share. Eventually, markets enter a harvest phase where efficiency becomes paramount.

Europe’s biosimilar sector has now transitioned into the expand and harvest stages. This maturation brings both opportunities and risks. On one hand, established production networks can deliver medicines at lower cost. On the other hand, procurement practices designed for earlier market phases no longer fit current realities.

The shift matters because different market phases require different procurement strategies. In early stages, attracting new entrants justifies accepting higher prices to build supplier diversity. In mature markets, maintaining multiple viable suppliers requires balancing price pressure with financial sustainability.

Current tendering practices often fail to make this adjustment. Single-winner contracts award the entire volume to whichever manufacturer bids lowest. This eliminates competition the moment the contract is signed. If that sole supplier encounters production problems, alternatives may no longer exist.

Furthermore, contracts frequently reopen whenever a new biosimilar enters the market. This creates perpetual uncertainty. Manufacturers cannot predict volumes or revenue. Planning becomes difficult. Investment in facility upgrades or environmental improvements looks increasingly risky when the next tender might redirect all volume to a competitor.

Three structural reforms gaining momentum in European procurement

Industry bodies, health economists, and procurement specialists increasingly converge around three core reforms. These proposals aim to preserve cost savings while addressing supply vulnerabilities that current practices create.

First, multi-winner tenders would replace single-winner contracts. Instead of awarding all volume to one supplier, procurement authorities would split contracts between multiple manufacturers. Each winner receives a guaranteed volume. This maintains competitive pressure while ensuring backup suppliers remain financially viable and operationally ready.

Multi-winner approaches offer clear supply security benefits. If one manufacturer faces production issues, others can increase output to fill gaps. Buyers retain negotiating leverage because they can shift volume between suppliers in subsequent tenders. Meanwhile, manufacturers gain the revenue predictability needed to justify ongoing investment.

Second, award criteria would shift from pure price focus to Most Economically Advantageous Tender principles. Under this approach, price remains important but stops being the sole deciding factor. Evaluation frameworks incorporate supply reliability, environmental credentials, quality track records, and manufacturing experience.

This matters because lowest price frequently correlates with highest risk. A manufacturer bidding aggressively low may be financially stretched, operationally inexperienced, or cutting corners on quality systems. MEAT criteria allow procurement teams to identify and avoid these risks while still achieving competitive pricing.

Third, tendering processes would provide greater predictability through stable lead times and accurate volume forecasts. Manufacturers need reliable information to plan production runs efficiently. When volumes fluctuate wildly or change at short notice, suppliers must maintain excess capacity as insurance. This drives up costs, which ultimately flow back to buyers through higher bids.

Conversely, predictable volumes allow manufacturers to optimize production schedules, reduce waste, and operate more efficiently. These efficiency gains create room for lower prices without compromising financial viability. Therefore, better planning benefits both buyers and suppliers.

Notably, reform advocates emphasize that artificial criteria must be avoided. Some policymakers have proposed restricting contracts to manufacturers with production facilities in specific locations. This approach increases costs and limits competition without reliably improving supply resilience. Modern pharmaceutical supply chains are inherently international. Attempting to force localization typically backfires.

EU pharmaceutical law reforms arriving in 2028

These procurement debates unfold against the backdrop of sweeping regulatory changes. The European Union is overhauling pharmaceutical legislation with major reforms expected to take effect in late 2028 or early 2029.

Several elements directly impact biosimilar markets and supply security. Market exclusivity periods are becoming shorter and increasingly conditional on genuine market presence across EU member states. This accelerates the timeline for biosimilar entry, potentially intensifying competitive pressure further.

The Bolar exemption is expanding significantly. This legal provision allows biosimilar developers to conduct certain activities before the reference product’s patent protection expires. Previously, the exemption covered only research and regulatory approval processes. Now it extends to activities needed for pricing, reimbursement, and tender participation.

In practice, this means biosimilar manufacturers can prepare market entry more thoroughly before patents expire. They can submit pricing dossiers, negotiate with payers, and even participate in procurement tenders while the reference product remains protected. Consequently, biosimilars can enter markets faster once patents expire, compressing the timeline for originators to recoup development costs.

Additionally, new shortage prevention duties require marketing authorization holders to maintain formal plans addressing supply disruption risks. Manufacturers must notify authorities promptly when they anticipate problems that could affect availability. These requirements recognize that medicine shortages impose real costs on healthcare systems and patients.

The reforms also signal regulatory awareness that supply security requires more than just multiple approved products. It demands financially viable manufacturers with robust production capabilities. This regulatory shift supports the argument for procurement reform, as current practices actively undermine the supply security that new regulations aim to protect.

Commercial realities facing biosimilar manufacturers today

Understanding these reform proposals requires appreciating the commercial pressures manufacturers face. Biosimilar development demands substantial upfront investment. Companies must build specialized production facilities, navigate complex regulatory pathways, and demonstrate comparability to reference biologics through extensive testing.

Once a biosimilar reaches market, manufacturers expect to recover these investments over time. However, European procurement practices increasingly prevent this. Aggressive price competition, driven by lowest-bid tendering, squeezes margins to levels that barely cover operating costs.

This might seem like an efficient market outcome. After all, competition should drive prices toward production costs. Nevertheless, biological manufacturing differs from typical commodity production. Facilities require ongoing investment to maintain regulatory compliance, implement new quality standards, and adopt environmental improvements.

When margins shrink too far, these investments become impossible to justify. Manufacturers defer facility upgrades, delay environmental projects, and reduce inventory buffers. In the short term, this allows them to maintain low bids. In the long term, it degrades production capacity and increases disruption risks.

Market consolidation intensifies these dynamics. As weaker manufacturers exit or get acquired, supplier numbers decline. The remaining companies gain pricing power, potentially reversing earlier savings. Meanwhile, supply security deteriorates because fewer manufacturers mean fewer alternatives when problems arise.

Financial sustainability requires prices that cover not just immediate production costs but also ongoing reinvestment needs. This is what reform advocates mean by sustainable pricing. It is not about protecting manufacturer profits arbitrarily. It is about ensuring prices support the long-term capacity to produce medicines reliably.

Environmental compliance adds another dimension. Pharmaceutical manufacturing faces increasing pressure to reduce emissions, manage waste responsibly, and improve energy efficiency. These improvements cost money. When procurement practices squeeze margins relentlessly, environmental investment becomes the first casualty.

UK businesses should recognize these dynamics because they mirror challenges in other sectors. Public procurement across multiple industries struggles to balance cost control with supply security. The biosimilar debate offers concrete examples of how short-term price focus can undermine long-term resilience.

Essential facts about European biosimilar procurement reform

• Single-winner tenders that award all volume to the lowest bidder eliminate competition immediately and create single points of failure in supply chains.
• Multi-winner contracts that split volume between multiple suppliers maintain competitive pressure while ensuring backup capacity remains financially viable and operationally ready.
• Most Economically Advantageous Tender criteria allow procurement teams to evaluate supply reliability, quality track records, and environmental credentials alongside price.
• Predictable volumes and stable lead times enable manufacturers to optimize production schedules, reduce waste, and operate more efficiently while maintaining lower sustainable prices.
• EU pharmaceutical law reforms taking effect in late 2028 will shorten market exclusivity periods, expand pre-launch activities for biosimilar developers, and impose mandatory shortage prevention duties on manufacturers.
• Artificial restrictions based on manufacturing location typically increase costs and limit competition without reliably improving supply resilience in internationally integrated pharmaceutical supply chains.

What UK businesses should consider about procurement sustainability

These European developments hold practical relevance for UK businesses in several ways. First, pharmaceutical supply chains remain deeply interconnected across Europe despite Brexit. Manufacturing sites, distribution networks, and regulatory frameworks overlap substantially. Disruptions driven by unsustainable European procurement practices inevitably affect UK availability.

Second, UK public sector procurement faces similar tensions. NHS supply chains, local authority contracts, and central government frameworks all navigate the balance between cost efficiency and supply security. The specific reforms gaining traction in Europe offer potential models for UK application.

MEAT criteria, for instance, could help UK procurement teams move beyond pure price focus without abandoning competitive tendering. By formally weighting factors like supply reliability and environmental performance, buyers can avoid the worst risks of lowest-bid models while maintaining transparency and competition.

Multi-winner approaches might suit certain UK contexts, particularly for critical supplies where single-source dependency creates unacceptable risk. Splitting contracts between multiple suppliers costs slightly more in the short term but provides insurance against disruptions that could prove far more expensive.

Furthermore, businesses supplying into UK public sector contracts should understand how sustainability considerations are evolving. Procurement teams increasingly recognize that the cheapest bid may carry hidden costs in terms of supply risk, quality problems, or environmental impact. Suppliers who can demonstrate genuine capabilities in these areas may find opportunities to differentiate beyond price alone.

The pharmaceutical reforms also illustrate broader regulatory trends. Across multiple sectors, regulators are moving from pure market access rules toward frameworks that explicitly consider supply security. Requirements for shortage prevention plans, supply chain transparency, and disruption notification are spreading beyond pharmaceuticals into other critical supply chains.

For manufacturers and distributors, this regulatory evolution creates both compliance obligations and commercial opportunities. Companies that invest early in robust supply chain management, transparent reporting systems, and proactive risk mitigation will be better positioned as regulatory expectations tighten.

Environmental sustainability represents another converging thread. Procurement reform advocates emphasize that sustainable pricing must cover environmental compliance costs. This reflects growing recognition that supply chain resilience and environmental performance are linked. Businesses that treat environmental investment as optional increasingly face commercial disadvantages as procurement criteria evolve.

UK businesses should also monitor how the Critical Medicines Act develops. This initiative aims to strengthen security of supply for essential medicines through various mechanisms, potentially including domestic manufacturing incentives. However, poorly designed interventions could inadvertently discourage biosimilar development or create market distortions that undermine the competitive dynamics needed for affordability.

The key insight is that procurement sustainability requires thinking beyond individual contract cycles. Short-term savings that degrade long-term supply capacity ultimately cost more. This principle applies across sectors, not just pharmaceuticals. Procurement teams and suppliers alike benefit from frameworks that balance immediate cost control with sustained viability.

Where to find detailed guidance on pharmaceutical procurement

Businesses seeking authoritative information on European pharmaceutical procurement and regulatory reform can consult several key sources. The Medicines and Healthcare products Regulatory Agency provides UK regulatory context and guidance on biosimilar approval processes and supply security obligations.

For European regulatory developments, the European Medicines Agency publishes detailed information on pharmaceutical law reform, including exclusivity changes and Bolar exemption expansions. Their guidance documents explain how these changes affect manufacturers and healthcare systems.

The Department of Health and Social Care addresses UK medicine supply security and procurement policy. Their publications cover how NHS procurement balances cost control with supply resilience, offering practical context for understanding reform debates.

For businesses interested in broader procurement sustainability principles, our sustainable procurement support helps organizations integrate environmental and supply security considerations into tendering processes. This work increasingly intersects with regulatory compliance as procurement expectations evolve across sectors.

Industry perspectives on biosimilar procurement reform appear in publications from organizations like Medicines for Europe, though UK businesses should verify claims against official regulatory sources. Academic health economics research also provides evidence on how different procurement models affect pricing, competition, and supply security in pharmaceutical markets.