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Swiss pharmaceutical giant Roche said on Monday it would put expansion in Germany on hold, dealing a blow to Berlin as a government-backed investment summit got underway.
"We have put all future investment decisions in Germany on hold for the time being," Daniel Steiners, head of Roche Germany, told Die Welt newspaper.
"As far as the pharmaceutical sector is concerned, I can say that political decisions have recently destroyed a great deal of trust."
German lawmakers in July passed a bill forcing pharmaceutical companies to cut prices as part of a bid to control costs in the country's statutory health insurance system.
Drugmakers have to grant a 15.5% rebate on most branded medicines from next year, up from a current rate of 7%.
The United States in June cited the reforms when it launched a tariff probe into Germany over what it said was Berlin's "persistent underpayment for innovative pharmaceutical products".
Asked about Steiners' comments, Economy Minister Katherina Reiche said the measures were necessary to keep a lid on social security contributions.
Nevertheless, she also praised "the enormous contributions of the pharmaceutical industry".
But Roche's criticism comes at an awkward time for the government, which is hosting a summit in Berlin on Monday and Tuesday aimed at drumming up business interest in Europe's top economy.
Suffering from subdued demand at home as well as US tariffs and increasingly fierce Chinese competition abroad, Germany's economy has posted little growth since a burst of pent-up pandemic demand at the end of 2022.
Speaking alongside Reiche at a press conference, Roland Busch, head of industrial giant Siemens, said Roche's announcement was a signal.
"Companies are saying: if the investment conditions in Germany aren't right, then they'll simply invest elsewhere," he said. "That's understandable."