July 22, 2025 14:43

Germany’s chemical-pharmaceutical industry appears to have halted its steep decline in early 2025, with some stabilization in key indicators. However, a closer look reveals that the chemical sector alone continues to struggle.

According to the German chemical industry association VCI (Verband der Chemischen Industrie), pharmaceutical production grew by 2% in the first half of 2025, while chemical production fell by 3% compared to the same period in 2024. A similar pattern emerges in revenue: pharma up 5%, chemicals down 2%. Employment, meanwhile, has remained stable at around 480,000.

Breaking down the figures for January through June, polymer production dropped by 3.5%, petrochemicals by 2.5%, and both fine and specialty chemicals and inorganic basic chemicals by 3–3.5%.

“The situation remains tense,” said VCI President Markus Steilemann (pictured above, center). “In the first half of the year, we produced about 15% less than in the pre-crisis year 2018. Other key sectors of the economy are also seeing double-digit declines. There’s no turnaround in sight for 2025.”

The main factor dragging the industry down is a sharp drop in orders: over 40% of VCI member companies reported a significant decline in incoming business, according to a recent survey. Making matters worse, capacity utilization has remained stuck at 80% for a third consecutive year—below the level required for profitability. At the same time, the trade balance is deteriorating: exports are falling while imports have risen by 2%.

“Now is the time to act together, with courage and decisiveness,” Steilemann urged. “Germany is simply too expensive compared to international competitors.” Most VCI members agree, citing excessive bureaucracy, high taxes, uncompetitive energy costs, and steep labor and raw material prices as major burdens. As a result, many firms are delaying urgently needed investments.

Looking ahead, VCI sees little chance of improvement in the medium term. “Germany is facing its third consecutive recession,” the association warned. Neither economic institutes nor most member companies expect a rebound in the second half of 2025. Plant closures and offshoring of investments are already underway. Insolvencies in the sector are also rising.

Still, there is a glimmer of hope: two out of three companies in the chemical-pharmaceutical sector say they are ready to invest again—if business conditions improve in Germany and across Europe. “The industry is ready,” Steilemann concluded. “Now it’s up to politics to do its part.”

VCI continues to call for urgent action in five key areas: cutting red tape; prioritizing future-oriented investment over current spending; driving a more effective energy transition and lowering overall electricity costs; strengthening resilience and innovation through targeted industrial policy; and fully leveraging EU opportunities to mobilize investment and position Europe as a global financial hub.

© Polimerica -  Reproduction prohibited, all rights reserved