MUNICH, Germany - Despite efforts by the government to support the German biotechnology sector, some of the largest pharmaceutical firms are openly speculating about the industry's future in Germany.

Bernhard Scheuble, chairman at Merck KGaA in Darmstadt, told the Frankfurter Allgemeine Zeitung (FAZ), one of the country's most influential newspapers, that his company is very seriously considering establishing a protein production facility in the United States rather than in Germany. The final candidates for the facility, a €300 million (US$295 million) investment, are an American city and a location in Thueringen, in eastern Germany.

Scheuble is concerned about not just the one production site, but about the German and European markets as a whole. For example, despite talks with many politicians, no serious German offers were made for the protein facility until very late in the process. Novartis AG recently announced that it would move its international research activities to the United States. Boehringer Ingelheim also stated the intention of making the lion's share of its direct investments in the U.S.

"It's only a matter of time," said Rolf Krebs, the head of Boerhinger, at the company's annual meeting.

Merck's chairman cited a better research environment as the main reason for considering relocation of the company's activities. The close cooperation between industry and universities is an important aspect of that environment, he added. On the other side, Europe suffers by comparison because of continuing divisions about approvals and coordination. Lengthy and bureaucratic processes for setting prices also made Europe and Germany less attractive than the United States.

Scheuble is serving as chairman of the Association of Research-oriented Pharmaceutical Manufacturers (Verband der forschenden Arzneimittelhersteller, or VFA). In that role, he is in conflict with the German government about market reforms in the health sector. The VFA is lobbying for better competitive conditions for the pharmaceutical industry and says that the German government, and European governments in general, should allow the market to play a greater role in health care and related fields. The FAZ often gives a voice to the concerns of large companies in Germany, and is generally seen as a business-friendly publication.