The attacker had to be resuscitated and was in intensive care for "extremely serious" injuries sustained when officers stormed the shop, they added.
German police say they've freed a woman who had been taken hostage in Cologne's main train station and have her captor in custody.
The suspect was severely injured when police stormed the pharmacy and later received CPR.
German special Police walks near the main train station in Cologne, Germany, October 15, 2018, after the train station was closed after hostage-taking. Police said that incident appears to have started Monday at a pharmacy inside the train station.
German railroad operator Deutsche Bahn said that all train traffic was shut down.
"We are in contact with the man", police spokesman Christoph Gilles told broadcaster n-tv.
DW's Dana Regev was at the scene and watched as negotiation crisis units.
The man had carried a suitcase and bag, which he left in the restaurant, and had also demanded "the release of a Tunisian woman", said police commander Klaus Rueschenschmidt, without giving further details.
Police could not confirm eye-witness reports that shots and explosions were heard.
He had first hurled a Molotov cocktail inside a McDonald's restaurant, injuring a teenage girl, then taken another woman hostage in an adjacent pharmacy. A 14-year-old girl was seriously injured with burns during the course of the hostage situation. Ambulances and heavily-armed police were lined up and waiting behind the train station. The initial attack triggered a fire alert which saw Cologne city fire engines deployed to the station. "A female hostage has sustained light injuries and is being tended to".
Police tweeted that the hostage was slightly injured and was now being treated. He was holding a real or replica pistol when commandos stormed the site and was in possession of camping gas containers. He allegedly said during the incident that he was a member of the extremist Islamic State group.