The chemical and pharmaceutical industry has begun 2026 weakly. According to the Association of the Chemical Industry (VCI), seasonal production decreased by 2.8 percent in the first quarter, resulting in a figure nearly six percent below the previous year’s level.
The primary drag on performance was a sharp decline in pharmaceutical production. This slump occurred after companies had capitalized on pre-effect benefits in 2025, anticipating looming US tariffs. Although chemical production saw a slight rise, it still remained below last year’s performance.
The industry has been pressed by high costs related to energy, raw materials, and transportation, a pressure that intensified due to the Middle East conflict. The blockage of the Strait of Hormuz exacerbated supply chain issues, driving up prices for oil, gas, and naphtha. In some sectors of the chemical business, demand experienced a temporary uptick due to precautionary purchasing, but the VCI does not anticipate a sustainable recovery this year.
Wolfgang Große Entrup, the VCI’s CEO, stated that the chemical sector continues to operate under “ongoing stress” weighed down by “bureaucracy, high costs, and global turbulence”. He noted that Germany is continuing to lose competitiveness unless Berlin and Brussels take countermeasures. While acknowledging that they have “little influence” over “geopolitical crises” he stressed that they do have control over “location conditions”. For future improvement, he identified the need for “strong leadership, reliability, and a clear industrial policy course”.
