COMPETITION & STATE AID

European Commission approves €400 million German State aid to enhance insulin supply resilience (see here)

On 8 September 2026, the Commission approved, under EU State aid rules, a €400 million German measure in favor 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”, i.e., an essential public service such as postal delivery, transportation, or energy).

Backdrop. To recall, the 2012 SGEI Framework of specific State aid rules for SGEIs entered into force (see here), which set out the conditions for allowing State aid in the form of public service compensation.

In 2025, the Commission amended the 2012 SGEI Decision (a component of the SGEI Framework) to clarify 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 thereby compensate these operators (i) up to €20 million per year without being subject to notification; (ii) over €20 million per year, subject to notification and approval under the SGEI rules.

German measure. Germany’s €400 million measure for pharmaceutical manufacturer Sanofi will compensate for the company’s 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 (including other manufacturers’ decisions to divert production capacity to GLP-1-RA products). Sanofi’s public service obligation includes, in particular:

•          building a new insulin factory at its site at Industriepark Frankfurt-Höchst by 31 December 2032;

•          ensuring an annual production of at least 1.1 tonnes of insulins at its Frankfurt-Höchst site and stockpiling 1 tonne of insulin active pharmaceutical ingredients until 31 December 2042; and

•          prioritizing the European Economic Area (EEA) markets in case of insulins shortages.

According to the Commission’s press release, Sanofi would close its insulin active ingredient production on its German site without the State aid. This would weaken the security of supply of insulins in the EEA markets, leaving only one production site in the EEA.

Commission assessment. In assessing the German measure under EU State aid rules (in particular, the SGEI Framework and Article 106(2) Treaty on the Functioning of the EU (TFEU)*), the Commission notably determined that:

•          Germany properly considered the public service needs;

•          the compensation does not exceed the net costs of the provision of the public service obligation; and

•          the entrustment complies with EU public procurement rules.

Next steps. The non-confidential version of the Commission decision will be available under case number SA.115239 in the State aid register on the Commission’s competition website, upon resolving any confidentiality issues.