The European Commission authorises German SGEI compensation of EUR 400 million in favour of Sanofi for the supply of insulin

On 9 September 2026, the European Commission authorised German State aid of EUR 400 million in favour of Sanofi-Aventis Deutschland GmbH (“Sanofi”) to secure the supply of human insulin and insulin analogues within the European Economic Area (“EEA”). This aid was granted as public service compensation in the context of services of general economic interest (“SGEI”), with the aim of covering the net costs incurred by Sanofi in implementing this public mission.

1. A measure designed to secure the supply of insulin

In the context of notifying an aid project to the European Commission, Germany has justified this measure by the structural risk to the security of supply. According to the German authorities, without public support Sanofi would cease production of active insulin ingredients at its Frankfurt-Höchst site. Such a development would significantly reduce available production capacity within the EEA, at a time when certain products, including human insulin, are already no longer manufactured within the EEA, thereby increasing dependence on imports from third countries. The Commission also notes that supply shortages have worsened against a backdrop of increasing reallocation of production capacity towards GLP-1-RA-type medicines.

2. The public service obligations imposed on Sanofi

As part of the public service obligation entrusted to it, Sanofi undertakes to:

• build a new insulin factory in Frankfurt-Höchst by 31 December 2032; 
• guarantee a minimum annual production of 1.1 tonnes of insulin until 31 December 2042; 
• build up a stock of one tonne of active pharmaceutical ingredients over the same period; and 
• give priority to EEA markets in the event of a shortage.

3. The Commission’s assessment under State aid law

The Commission’s assessment was based on Article 106(2) TFEU and the 2012 SGEI Framework. It considered, on the one hand, that the service entrusted to Sanofi met a genuine public-interest need relating to the resilience of the insulin supply and, on the other hand, that the compensation did not exceed the net costs incurred in carrying out this task. It also noted that the entrustment agreement concluded between Germany and Sanofi included mechanisms designed to prevent any overcompensation and, where necessary, to ensure its recovery and that the entrustment complied with the requirements of EU public procurement law. 

On this basis, the Commission concluded that the German measure complied with EU State aid rules and constituted compatible aid. 

4. A decision that forms part of efforts to strengthen the European policy on essential medicines

This decision forms part of a broader development in the European framework governing essential medicines, notably following the pandemic.

Indeed, the SGEI decision adopted by the European Commission in December 2025 now provides explicitly for its application to public service compensation for the provision of critical medicines if the compensation does not exceed an annual amount of EUR 20 million. Under the SGEI decision, Member States are thus allowed to compensate, without prior notification to the European Commission, for public service obligations aimed at securing the supply of essential medicines, provided that a market failure is identified and the compensation does not exceed an annual amount of EUR 20 million during the mandate. 

Above this threshold, prior notification to the European Commission remains compulsory and the measure’s compatibility must be assessed in light of the SGEI framework, which imposes stricter compatibility conditions (notably in terms of public procurement and efficiency incentives). 

Finally, the approval of the German measure follows on from the European Commission’s Critical Medicines Act proposal to strengthen the availability, supply and production of essential medicines within the EU, such as antibiotics, insulin and painkillers. This initiative aims at securing supply chains, supporting European production capacity and limiting strategic dependencies on suppliers outside the EU.  

In this context, the Commission has also published guidance on the application of State aid rules under the Critical Medicines Act in order to provide explanations and illustrations on how strategic projects, as defined in the Critical Medicines Act proposal, can receive financial support from Member States whilst complying with State aid rules.