Macron’s Push for German Pharma Alliance Runs Into Trouble

At the height of the pandemic, Germany and France hatched a plan to bring medical production back to Europe. Less than 12 months later, the initiative has hit a wall.

Election-year politics in Germany and the fading urgency of the coronavirus crisis have brought the effort to a standstill, according to people familiar with the matter. The setback shows how French President Emmanuel Macron’s ideas to re-engineer Europe are faltering and suggests a retrenching to the more usual pattern of national squabbling.

While talks on the medical initiative are continuing, there’s little to no momentum with Berlin sidetracked by the pending end of Chancellor Angela Merkel’s 16-year reign following September’s national election, said the people who asked not to be identified because the talks are private. At a joint cabinet meeting on Monday, the two governments could agree only to further talks on how they might cooperate.

“Germany and France want to work very closely together as a lesson from the pandemic,” Merkel told reporters afterward.

Macron’s Push for German Pharma Alliance Runs Into Trouble

The initiative was aimed at repatriating manufacturing of medicines and equipment that had wandered to the U.S. and especially Asia over the past decade. The plan was to set up a so-called Important Project of Common European Interest -- a European Union program for promoting innovation that allows for the broader use of state aid.

It was an obvious area for deeper EU integration after glaring deficiencies were revealed in the course of the pandemic. The goal was to support new sites to produce products from test tubes to lipids for vaccines, creating jobs and bolstering the region’s autonomy in the process.

But in the EU, even joint initiatives by the region’s biggest economies can get bogged down by competing agendas and red tape, showing the struggles facing the bloc’s ambitions to become a global player.

German Economy Minister Peter Altmaier, a fluent French speaker who has voiced sympathies for the country’s activist approach to managing its economy, was a strong backer of the medicines project -- along with a series of other joint initiatives from battery production to semiconductors and cloud computing.

But Altmaier is also a close ally of Merkel, and he’s been sidelined as her Christian Democrats shift toward a more free-market approach. The clearest sign came when Armin Laschet, the conservatives’ candidate for chancellor, appointed Friedrich Merz to oversee the party’s economic policy.

The former BlackRock Inc. director is a hard liner who’s an advocate of Germany’s national interests and consequently more skeptical about economic cooperation with France. His ascendancy leaves Altmaier with little room to force a breakthrough in the final months of his tenure.

As the European effort stumbles, Merkel is working on a national strategy, and her officials are busy talking with the U.S. about a common approach.

Merkel and key cabinet members met in May with scientists and medical-industry officials to discuss how to avoid shortages in the future. The government has also set up a task force that seeks to foster cooperation between German and U.S. companies and is in talks with a number of producers about potential partnerships, a person familiar with the matter said.

On Wednesday, her cabinet passed a national program to enter into contracts with companies for domestic vaccine production. The initiative should secure more than 600 million doses of coronavirus vaccines annually for Germany and Europe, Deputy Economy Minister Andreas Feicht told reporters.

Berlin’s deadlock has led to frustration in Paris. There’s an understanding of how tenuous access to medical supplies can be after the U.S. froze vaccine exports earlier this year. And there’s concern that China could seek to exploit such pinch points in the future.

With talks over joint medical hubs foundering, French Finance Minister Bruno Le Maire’s efforts to kick-start the process have developed a hint of desperation. Earlier in May, he floated the idea of a European champion that could be created by merging French and German pharmaceutical companies, urging Altmaier to show courage to find a way past the obstacles, according to officials briefed on their conversation.

Altmaier could offer little more than a smile and a polite refusal, observing that the German government doesn’t push companies into partnerships.

©2021 Bloomberg L.P.

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