The chemical industry is an intermediate goods producing sector. Consumers can buy only 15 percent of the chemical industry’s products directly, such as coatings, paints or personal care products. Most of the production is supplied to industrial processors, mainly to the mechanical engineering, textile, construction, packaging and automotive industries. Among manufacturing industries, the chemical industry is one of the three most innovative and research-intensive sectors; over 10 billion euros are spent annually on research and development. In terms of sales, the German chemical industry ranks fourth worldwide behind the USA, Japan and China. It is also one of the most important exporters in the world.

The pharmaceutical industry is an important branch of the chemical industry. Pharmaceuticals account for over 20 percent of total chemical production. With a net value added of almost 100,000 euros per employee, the pharmaceutical industry is one of the most productive sectors in Germany and is also particularly research-intensive. Research expenditure averages more than 10 percent of sales.

The year 2019 was difficult for the chemical-pharmaceutical industry due to the global economic downturn and trade disputes between China and the United States. At the same time, domestic demand also fell.

The production of chemical-pharmaceutical products fell by 7.4 percent in relation to the previous year. This is largely attributable to a special statistical effect in the Pharmaceuticals Division (minus 16.5 percent). The Chemicals division, excluding Pharmaceuticals, nevertheless posted a 2.5 percent drop in production. Despite falling oil prices, producer price increases of 1 percent were achieved in full-year 2019. Sales in the chemical-pharmaceutical industry suffered a significant decline of 2.3 percent in 2019, falling to 198.2 billion euros.

Domestic demand for chemical products from other industries was 3.3 percent below the level of the previous year in 2019 as a whole, while foreign sales .fell by 1.7 percent. The German chemical industry was able to expand its employment by approximately 0.5 percent. Currently, the industry has an average of around 464,000 employees.

Even before the Corona crisis, companies in the chemical-pharmaceutical industry were not very optimistic about 2020 and expected only slight increases in production and sales. In the first quarter, the full impact of the pandemic on the industry was not yet felt.

Against this background, a significant decline in production and sales is expected in the chemical and pharmaceutical industry in Germany in 2020. It will not be possible to make a more accurate forecast until after the second quarter.