Europe's Last Full Penicillin Plant in Crisis: Alarm Grows Over China's Cheap Antibiotics

Standing at the green foothills of the Austrian Alps, Europe's last full-scale penicillin production centre now faces an uncertain future. The Sandoz plant at Kundl makes the same kinds of antibiotics and ingredients that China now produces for the European market at far lower cost, and that competition has put the plant's very existence in question.

Lower prices may be a relief for Europe's cost-conscious governments and their public health programmes, but for Kundl they are a crisis. This is the only centre in Europe where every step of penicillin production is completed, including the main active ingredient. If it closes, Europe will have no production of its own left.

Several rival firms have already announced closures or moves of production to China. Against that backdrop, the Kundl plant has become the centre of the West's ongoing debate about self-reliance — the question is no longer about one factory, but about the medicine security of an entire continent.

Speaking to Reuters from her office overlooking the plant, Kundl site manager Stephanie Zedner said that if this factory closes, Europe will become completely dependent on China. Around the plant stand the Tyrolean Alps and rows of gleaming storage tanks — behind that scenery, a fight for survival is under way.

A century ago Alexander Fleming discovered penicillin in London, and it remains the main antibiotic for treating life-threatening infections. About 1.5 billion doses of penicillin are now used in Europe every year, yet control over producing the ingredients they need has largely passed to China.

According to Eurostat, China's share of penicillin and its derivatives imported into the European Union rose from 44 percent in 2019 to 86 percent last year. The products arrive mainly in bulk, as active pharmaceutical ingredients, or APIs. The rise fits Beijing's ten-year 'Made in China' plan, which aims to move the country further up the global manufacturing value chain.

European exports of the same products, meanwhile, are now less than a fifth of their peak in the early 2000s. The figures show how China has moved beyond textiles and assembly into industries traditionally European, from medicines to machinery. In 2025 the EU's goods trade deficit with China reached about one billion euros a day — double the level of 2020.

Just three years after completing a 200 million euro expansion, Sandoz has now asked the European Commission to open an 'anti-dumping' investigation — an inquiry into unfairly low-priced sales. In its complaint filed last March, the company said Chinese amoxicillin API is being sold in Europe below the cost of production because of support through Chinese government subsidies. The investigation could lead to measures such as tariffs against Beijing.

In written evidence submitted to British lawmakers earlier this year, Sandoz said that unless governments pay more for penicillin, Kundl's ability to supply penicillin in Europe is not 'commercially sustainable'. Beijing's control over the penicillin supply chain creates an 'inherent strategic risk', the company argued — much like China's control over critical minerals.

In that document Sandoz asked for more support and wrote: 'Antibiotic supply systems could become a tool of economic coercion or hybrid warfare, especially at times of diplomatic tension.' According to Sandoz, about 90 percent of the active ingredients used in antibiotics worldwide are now produced outside Europe — a large share from China, or from India, where Chinese chemical ingredients are used.

In the company's view, a major reason Kundl is at risk is European governments' procurement policy — buying medicines only on the basis of the lowest price instead of keeping supply diverse. Fierce competition and that procurement process also mean it cannot raise its prices. China, meanwhile, has spent many years establishing itself as a reliable supplier of essential medicines and is becoming increasingly important in advanced pharmaceuticals as well.

The European Commission is expected to open the anti-dumping investigation soon. But EU trade experts, officials and China researchers told Reuters that with many complaints piled up, it is still unclear exactly when the inquiry will begin. Of the 23 anti-dumping and anti-subsidy investigations currently running in the European Union, 20 involve China alone or together with another country. The Commission declined to comment. Kundl's future now depends largely on the decision taken in Brussels.