FRANKFURT, May 29 (Xinhua) -- Germany's chemical and pharmaceutical industry had a weak start to 2026 and a recovery remains elusive as the industry is under stress, a report published on Friday showed.
Production of the chemical and pharmaceutical industry shrank by nearly six percent in the first quarter year on year and capacity utilization remained below a profitable level, the quarterly report published by the country's chemical industry association VCI said.
The first-quarter decline was mainly due to a sharp fall in the pharmaceutical sector, reflecting a high base in 2025, when German companies pulled forward orders and production in response to threatened U.S. tariffs.
Pharmaceutical output led the decline, falling 8.7 percent year-on-year in the first quarter, while chemical production dropped 4.3 percent amid capacity utilization still too low to support profitable operations.
The Q1 sales of chemical and pharmaceutical industries stood at 50.9 billion euros (59 billion U.S. dollars), up by 2.1 percent quarter on quarter and down by 5.4 percent compared with the same period last year.
The Business Climate Index in Germany's chemical industry, which was developed by the Munich-based think tank ifo Institute, fell to minus 30.2 points in May in spite of the recent uptick in demand due to disruptions in global supply chains.
The chemical industry's outlook, according to the VCI report, is overshadowed by the Iran war. Companies in the industry showed in a recent VCI survey that they are concerned about rising energy, raw material and transport costs, as well as increasing material shortages.
These shortages have long since reached the chemical industry. According to the VCI, there is currently a shortfall of 20 percent in global oil and gas production and 5 to 10 percent in chemical feedstocks. "Behind these stark figures lie dramatic developments," said VCI head Wolfgang Grosse Entrup.
The VCI expects the industry to experience a difficult year in 2026.
"Production is likely to decline again for the year as a whole. While rising prices could support sales, margins will remain under pressure," said the report.
Entrup cautioned that the chemical sector remained under pressure and pharmaceuticals faced even tougher conditions. Any pockets of stability, he suggested, reflected geopolitical stockpiling rather than a genuine improvement in business sentiment.
For the pharmaceutical industry, an ongoing war in the Middle East is jeopardizing the supply of medicines in Germany, the country's largest pharmaceutical industry association Pharma Deutschland recently said in a press release.
The looming shortage of helium and other petrochemical raw materials is putting pressure on key analytical and production processes involved in the manufacture of tablets, infusions and biologics.
"We must clearly identify the risks," Pharma Deutschland chief Dorothee Brakmann called for a clear assessment of the risks, warning that failure to take countermeasures now could lead to medium-term shortages, particularly of pharmaceuticals. ■