Prescribing autonomy: Europe’s new health investment theme

In May 2026, the European Union reached a provisional agreement on its Critical Medicines Act, a landmark regulatory initiative aimed at strengthening the resilience of pharmaceutical supply chains and ensuring the availability of essential medicines. The legislation explicitly seeks to diversify supply chains and incentivise domestic production of both medicines and their key ingredients. This renewed focus on health sovereignty should be understood in a historical context, as a response to the Covid-19 pandemic during which Europe experienced significant shortages of medicines and critical inputs. The crisis exposed structural dependencies, most notably Europe’s reliance on external suppliers for active pharmaceutical ingredients (APIs), many of which are sourced from Asia. Today, estimates suggest that between 60% and 80% of APIs used in Europe are produced in China or India, illustrating the scale of this vulnerability.

It is against this backdrop that European health sovereignty has evolved into a comprehensive policy – and investment theme – structured around three key pillars: crisis management, industrial reshoring, and innovation leadership.

The first pillar of health sovereignty focuses on preparedness and rapid response. Its goal is to ensure that Europe can effectively manage health crises without experiencing the severe shortages and coordination gaps that characterised the early stages of the pandemic. Central to this is the development of an integrated crisis management framework. Institutions such as the Health Emergency Preparedness and Response Authority (HERA) have been established to oversee stockpiling, procurement coordination, and emergency response planning, while bodies such as the European Medicines Agency (EMA) and the European Centre for Disease Prevention and Control (ECDC) have seen their roles expanded, particularly in monitoring shortages and accelerating decision-making in emergencies.

Of course, financial resources are playing an essential role in underpinning this system. The EU4Health programme, for instance, enjoys a budget of approximately EUR 4.4 billion for the 2021-27 period and is supporting crisis preparedness, disease prevention, and the strengthening of national healthcare systems. These combined efforts are creating a defensive layer designed to anticipate and absorb future health shocks. The emphasis is no longer solely on reacting to crises, but on building permanent readiness which ensures supply chains, emergency stockpiles and established coordination mechanisms are already in place when needed.

While crisis management provides a defensive shield, the second pillar of health sovereignty addresses the structural weaknesses exposed during Covid-19: Europe’s reliance on external suppliers for essential medicines and components. The Critical Medicines Act is at the heart of this transformation, with its core objectives to strengthen supply security, expand EU-based manufacturing capacity, and encourage diversification of supply chains.

The Act marks a significant shift in policy priorities. Historically, pharmaceutical procurement in Europe has largely been driven by cost considerations, often favouring production in lower-cost regions. Today, supply security and strategic autonomy are becoming equally important criteria. The rationale for this shift is clear. Europe’s pharmaceutical supply chain has become highly globalised and concentrated, leaving the system exposed to disturbances, ranging from geopolitical tensions to logistical bottlenecks; the goal is thus to ensure consistency of supply and avoid such potential disruptions in an increasingly uncertain global environment.

From a commercial perspective, this reshoring trend is already reshaping the sector. Companies with strong manufacturing capabilities, particularly in biologics and complex therapies, are becoming increasingly strategically important. For example, firms such as Switzerland’s Lonza Group – a key player in mRNA vaccine production – and Sandoz – owner of the last fully integrated, end-to-end, penicillin production chain in Europe – provide both production sovereignty and supply security. And, beyond pharmaceuticals, the concept of health sovereignty also extends to infrastructure and essential services. Companies involved in water, sanitation or environmental management all contribute to the functioning of healthcare systems, highlighting the broader ecosystem required to sustain public health.

The third pillar is forward-looking and strategic. While the first two pillars focus on resilience and autonomy, innovation will determine Europe’s ability to remain competitive in global healthcare, and secure the first two pillars for the long-term. From a governance perspective, at the centre of these efforts is Horizon Europe, the EU’s flagship research and innovation programme, which allocates substantial funding to health-related research. Complementary initiatives, such as the EU Biotech Act, are aiming to accelerate innovation and improve access to capital for emerging technologies.

Efforts at building this innovation layer reflect a critical shift: health sovereignty is not only about domestic production of the medicines we need today, but also about developing the next generation of therapies, diagnostics and healthcare solutions. In this respect, Europe currently benefits from a strong base of globally competitive companies. Large pharmaceutical players such as AstraZeneca combine scale with sustained R&D investment and extensive clinical pipelines, supporting innovation across multiple therapeutic areas, while more specialised companies such as Belgium’s UCB focus on high-value niches, including neurology and immunology: Meanwhile, companies such as Siemens Healthineers are providing the technological infrastructure underpinning modern healthcare systems, from imaging to diagnostics.

These three pillars of health sovereignty – crisis management, reshoring and innovation – are translating a range of distinct, but interconnected, investment opportunities. At one end of the spectrum, innovationdriven companies offer exposure to long-term growth through their ability to develop breakthrough therapies and technologies. Their competitive advantage lies in intellectual property, scientific expertise and sustained R&D investment. At the other end, established industrial players are providing the backbone of supply security, with their ability to manufacture at scale, ensure continuity of supply, and stabilise healthcare systems in times of stress.

Between these two poles lies a broader ecosystem of companies contributing to health outcomes through preventive care and other essential services. Nutrition, for example, plays a fundamental role in public health, while environmental services such as water and waste management are critical for sanitary conditions and disease prevention. This multi-dimensional framework illustrates that health sovereignty is not confined to pharmaceuticals alone but encompasses a wide range of sectors that collectively ensure Europe’s ability to protect, treat and sustain its population.

For policymakers, the objective is clear: reduce vulnerabilities and enhance autonomy in an increasingly uncertain global environment. And, for investors, the implications are significant; the concept of health sovereignty provides a lens through which to analyse businesses across the healthcare value chain, linking policy priorities with long-term growth dynamics. In this sense, European health sovereignty is no longer a temporary theme shaped by crisis conditions – it is set to become a defining feature of the region’s economic and strategic landscape.