NCCS report on climate-change impacts in Switzerland’s pharma supply chains; Pharma sector losses ~70% higher by 2060
National Centre for Climate Services NCCS
China is one of Switzerland’s most important trading partners and has established itself primarily as a supplier of electronic goods, machinery, textiles, and chemical and pharmaceutical products. The country is relevant for Switzerland not only as a source of direct imports, but also as a supplier. At the same time, China is particularly affected by the impacts of climate change.
China is affected by several aspects of climate change. Its average rise in temperature is higher than the global average. The country is vulnerable to heatwaves, storms, floods and droughts. Melting glaciers and heavy rainfall could jeopardise the safety of dams. At the same time, sea levels are rising.
In 2023, more than half of Swiss companies in the chemical and pharmaceutical sectors considered themselves to be moderately or heavily dependent on China, and the proportion of companies in the electrical sector was even higher.
China is the second-largest manufacturer of pharmaceutical products. Possible dependence on these pharmaceutical products could pose a challenge to Switzerland’s security of supply.
China aims to be carbon neutral by 2060. To achieve this, the country must completely transform its energy system, which is heavily reliant on fossil fuels. In addition, China is calling for ‘proactive adaptation’ to climate change at national level, for example through changes in land-use patterns, with the primary aim of safeguarding food and supply chains.
The most significant direct impacts of climate change on key sectors in China are due to tropical cyclones and river flooding, with cyclones leading to particularly high production losses in the agricultural sector.
Sectors in China with the highest direct production losses due to climate risks
According to the model results, today the production loss due to climate risks in China amounts to over USD 40 billion. That represents 0.2% of China’s total output (USD 22.608 trillion). Assuming a future scenario involving worst-case global warming (RCP8.5), the production loss will rise to over USD 50 billion by 2060.
In the pharmaceutical industry – one of China’s critical sectors for Switzerland’s supply chains and security of supply – direct damage (annual averages) from river flooding and tropical cyclones is expected to rise significantly by 2060. In both future scenarios, losses are around 70% higher than today. Given the Swiss pharmaceutical industry’s dependence on China, these direct production losses will also be felt in Switzerland.
The direct effects of climate change in China are likely to lead to indirect effects in Switzerland:
In absolute terms , model calculations suggest that the Swiss pharmaceutical sector is likely to be hardest hit by climate-related disruptions to supply chains, followed by the wholesale trade and the manufacturing industry for data processing equipment, as well as electronic and optical products.
In relative terms , i.e. production losses in individual Swiss industries relative to their respective total annual production, the textile sector is likely to be the hardest hit.
The ten Swiss sectors with the highest indirect production losses due to climate risks in China
Storms and flooding cause the greatest potential damage
According to the calculations, almost two thirds of the losses incurred by both the Swiss pharmaceutical and textile industries are caused by tropical cyclones, and one third by river flooding in the Chinese agricultural sector.
This could indicate that key agricultural raw materials used in the manufacture of pharmaceutical products – which Switzerland either produces itself or imports from other countries such as China – are now only available to a limited extent.
Negative impacts on supply chains will increase, even with moderate climate change
China, one of Switzerland’s most important trading partners, is already heavily affected by various risks associated with climate change. The impact on Swiss supply chains is likely to increase further in the future, even under a more moderate climate scenario. Over the past decade, however, China has been pushing for a greener economy, which would entail a major transformation of the economy as a whole. In addition, China’s (political) focus on strategies and measures to adapt to climate change could help to protect Switzerland’s supply chains.
The same data basis was used for the China case study as for the overall project. In addition, the project team sought to contextualise the findings within the current situation in China.
The comprehensive results of the project, interpretations and explanations of the method are summarised in the final report: NCCS-Impacts: Final Report. Project: Global impacts of climate change on Switzerland (en)
NCCS-Impacts: Final Report. Project: Global impacts of climate change on Switzerland (en)
The NCCS and priority themes