Commission approves €400 million German State aid to enhance insulin supply resilience

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The European Commission has approved, under EU State aid rules, a €400 million German measure in favour of Sanofi-Aventis Deutschland GmbH (‘Sanofi’) to strengthen the resilience of the supply of human insulin and insulin analogues (‘insulins’). Under the measure, Germany will pay Sanofi a public service compensation to provide a service of general economic interest (‘SGEI’).

The German measure

Germany notified to the Commission a €400 million measure for pharmaceutical manufacturer Sanofi, headquartered in Frankfurt-Höchst, to compensate Sanofi for its net costs for the provision of an SGEI to strengthen the resilience of the supply of insulins for German patients against production and supply bottlenecks. As part of its public service obligation, Sanofi will:

• build a new insulin factory at its site at Industriepark Frankfurt-Höchst by 31 December 2032;
• ensure an annual production of at least 1.1 tonnes of insulins at its Frankfurt-Höchst site until 31 December 2042;
• stockpile 1 tonne of insulin active pharmaceutical ingredients until 31 December 2042; and
• prioritise the European Economic Area (‘EEA’) markets in case of insulins shortages.

Without receiving the aid in question, Sanofi would close its German site. This would decrease the security of supply of insulins in the EEA markets, as no production sites would remain in Germany and only one production site would remain in the EEA. As some products, such as human insulin, would no longer be produced in the EEA, this would make European markets dependent on imports from third countries. Moreover, supply shortages have become more frequent due to increased diversion of production capacities to GLP-1-RA products.

The Commission’s assessment

The Commission assessed the German measure under EU State aid rules, in particular Article 106(2) of the Treaty on the Functioning of the EU, which provides the legal basis for assessing the compatibility of State aid for SGEIs, and the 2012 SGEI Framework.

In particular, the Commission found that:

• the SGEI entrusted upon Sanofi is genuine and Germany has properly considered the public service needs;
• the compensation does not exceed the net costs of the provision of the public service obligation;
• the entrustment act, signed between Germany and Sanofi, contains arrangements for avoiding and recovering any overcompensation;
• the entrustment complies with EU public procurement rules.

On this basis, the Commission approved the German measure under EU State aid rules.

Background

In 2012, a set of specific State aid rules for SGEIs, the 2012 SGEI Package, entered into force. This package sets out the conditions under which State aid in the form of public service compensation is allowed under EU State aid rules. It includes the SGEI Decision which provides the conditions under which Member States can compensate entrusted public service obligations while being exempted from the obligation to notify the public service compensation to the Commission.

The Commission revised the SGEI Decision on 19 December 2025 and clarified that Member States can entrust specific public service obligations to operators to enhance the security of supply of critical medicines when market failure is identified and compensate these operators up to €20 million per year without notification.

When compensation is higher than €20 million per year, it has to be notified and can be approved under the SGEI Framework.

In March 2025, the Commission proposed the Critical Medicines Act to improve the availability, supply and production of critical medicines within the EU. The purpose of the Act is to prevent and tackle severe shortages of essential drugs, like antibiotics, insulin, and painkillers, by strengthening supply chain resilience, boosting domestic manufacturing, and reducing heavy reliance on external suppliers. At the same time, the Commission issued guidance on the application of State aid rules in the context of the Critical Medicines Act.

For more information

The non-confidential version of the decision will be made available under the case number SA.115239 in the State aid register on the Commission’s competition website once any confidentiality issues have been resolved. New publications of State aid decisions on the internet and in the Official Journal are listed in the Competition Weekly e-News.