Germany’s chemical industry ended 2025 under mounting strain, with production, prices and sales all declining in the final quarter.  

All these highlight the sector’s deepening downturn despite modest support from the country’s stronger pharmaceutical business, as per Verband der Chemischen Industrie, Europe's largest association for the chemical and pharmaceutical industries. 

The situation remained tense across the chemical and pharmaceutical industries in the last three months of the year. While a handful of large orders sparked a brief recovery among some industrial customers, the broader chemical sector continued its slide. Production, prices and sales all fell again, and capacity utilization stayed below the break-even point. 

Pharmaceutical companies provided a rare bright spot. Strong growth in the sector helped stabilize the overall performance of the industry. Yet even here, concern is rising as companies face growing pressure from a weak industrial economy, surging imports and fierce price competition. 

Geopolitical tensions are adding to the strain. The war in Iran is creating fresh risks for global supply chains, particularly through the blockade of the Strait of Hormuz. Industry leaders warn the impact could extend well beyond oil and gas supplies. 

Companies are increasingly worried about severe shortages of key raw materials including ammonia, phosphate, helium and sulfur. Early signs of disruption are already appearing in international supply chains. 

No turnaround in sight 

Industry leaders see little sign of a quick recovery for Germany’s chemical sector. Government relief measures have yet to reach factories and are widely viewed as insufficient to offset structural disadvantages facing the country as an industrial location. 

VCI Managing Director Wolfgang Große Entrup issued a stark warning about the sector’s outlook. 

“The chemical industry’s annual results are abysmal – production, sales, and prices are all in the red. Pharmaceuticals, with a solid increase, is a bright spot. After the change of government, we had hoped for significantly more. Companies are extremely frustrated with the sluggish economic policy course correction. 2026 will not be any easier.  

"Even before the Iran-Iraq War, there was no sense of optimism. The longer the war lasts, the more severe the consequences. High prices and persistent uncertainty are pushing many businesses to their limits. Strategic planning is becoming increasingly difficult. Instead, companies are operating on a short-term basis. The world order is being redefined. Europe is struggling to find its bearings. Germany is reforming at a snail’s pace. Without a genuine will to reform and significant momentum in Berlin and Brussels, a structural collapse of the industrial base is imminent.” 

Key figures 

Forecasts for 2026 remain uncertain as the war with Iran adds further instability to an already fragile outlook. 

Overall production in the chemical and pharmaceutical industries rose 0.9 percent in the fourth quarter of 2025, driven entirely by strong growth in pharmaceuticals. Output was 1.9 percent higher than a year earlier. 

Chemical production, however, fell sharply, dropping 2.9 percent compared with the previous year and remaining at a very low level. Capacity utilization in chemical plants averaged just 72.5 percent in 2025, well below healthy levels. 

For the full year, total industry production declined by 0.5 percent. Chemical output dropped 3.3 percent while pharmaceutical production grew by 4.5 percent. 

Price pressure also intensified. Producer prices in the sector were largely unchanged in the fourth quarter but stood 0.6 percent below levels a year earlier. Chemical prices continued to slide, mainly due to growing import pressure, while costs remained high compared with international competitors. 

Sales also weakened. Total industry sales fell 0.6 percent in the fourth quarter compared with the previous quarter, reaching €51.8 billion—2.8 percent below the level recorded a year earlier. 

Domestic sales slipped to €18.9 billion after seasonal adjustment, down 2.3 percent. International business showed a slight recovery compared with the previous quarter, reaching €32.9 billion, but still remained 2.7 percent below the previous year’s level, underscoring the sector’s weak price competitiveness. 

For 2025 as a whole, the chemical and pharmaceutical industries generated combined sales of €220 billion, a decline of 1.4 percent. Chemical sales fell 3.8 percent, while pharmaceuticals grew by 5.5 percent. 

Domestic sales totalled €83 billion, with international markets accounting for €136 billion.