London - Shortages of antibiotics has been reoprted in many countries around the world, however in Europe the problem is particularly acute.

With respiratory infections returning with a vengeance after the lifting of pandemic restrictions, and the ware in Ukraine having up the cost of everything from energy for factories to cardboard for packaging to aluminium for bottle caps, more shortages are on the cards.

With prices for generics regulated, many European drugmakers said they are reluctant to expand capacity.

According to 13 European manufacturers and six generic drug industry associations and trade groups who spoke with Reuters, many firms are struggling to make enough money to justify making antibiotics at all - let alone increase production.

Many European governments before launching tenders, compare the price of a generic medicine to other markets in the region, or to similar drugs at home, to set a reference price which then serves as the benchmark in negotiations with suppliers.

They typically award contracts to manufacturers offering the lowest price, which then results in further downward pressure on prices in subsequent tenders, drugmakers say.

Generic medicines now account for about 70% of all dispensed medicines in Europe, but only 29% of the money spent on drugs by national health agencies, according to Medicines for Europe.

European generic drugmakers say the tender system and regulated prices have fuelled a race to the bottom, and European firms are being undercut by suppliers from Asia.

Over the past decade, this has forced some European companies to either cut output or move manufacturing of generics and active pharmaceutical ingredients (APIs) needed to make them to India and China, where costs are much lower.

Industry executives now say an overhaul of pricing schemes is the only way to reinvigorate manufacturing in Europe, both to avoid shortages in the future and to prevent the continent becoming even more dependent on Asia for essential medicines.

In the interim, alternative medicines could be used, however a number of patient groups warned last month, that substitutions were likely to squeeze supplies of other drugs.

"The key long-term issue is not the production cost, it's the overall European market framework, which doesn't allow us as a producer to adjust prices flexibly to reflect change in input costs, especially on essential medicines," said Giovanni Barbella, global supply chain head at Sandoz, the generic division of Swiss pharmaceutical giant Novartis (NOVN.S).

Prices of antibiotic generics in Britain are on a par with Spain, according to drug pricing expert Melissa Barber, while in Germany, the biggest generics market in Europe, the average amount manufacturers receive has fallen 66% over the past decade, Germany's generic drug association Pro Generika said.

Some countries are promising to take action.

Germany's parliament is due this year to consider legal changes to its tender system for generic drugs while Spain's Health Ministry told Reuters last month the government was considering changes to its pricing system that could result in temporarily paying higher prices for drugs such as amoxicillin.
-Reuters