Guilds used to rule all professions in the middle ages and a lot of the regulations are sadly derived from that. This means you can't do certain things without the proper certifications (e.g. if you're a licensed car mechanic or "KFZ-Mechatroniker" that doesn't mean you're also allowed to do paint jobs because for that you'd need to be a licensed "Lackierer").
Likewise, pharmacies and pharmaceuticals in general are heavily regulated, especially with regard to prescription drugs. I think online pharmacies only became legal quite recently (previously most of them operated out of other EU countries, effectively creating a grey market with all the problems that entails for the customers).
What killed your friend's B & B idea was likely the strict requirements for food safety. It's practically impossible to use private kitchens to produce commercial food products and commercial kitchens have to conform to various rules (plus the employees working in them have to obtain the necessary certificates). IMO this is a good thing, but it can of course make easy things (like serving a breakfast in a single bedroom B & B) very difficult.
The huge difference between the US and Germany is that in Germany suing for damages results in compensations that are a fraction of what you see in the US. But at the same time companies are more likely to run into trouble with the authorities before they can harm you and even if you end up with permanent injuries the public healthcare covers them in most cases -- i.e. you're less likely to be harmed and the economic damage of that harm is likely considerably smaller.
But as an employer I have to say some of the regulations, laws and restrictions can be incredibly tedious and annoying. Especially if you're running a very small business.