West Asia Conflict Impact: Growing Concerns in the Pharma Industry

The impact of the ongoing conflict in West Asia is causing serious concern for India’s pharmaceutical industry. Disruptions in the supply of key petrochemicals such as benzene, toluene and ethylene derived from crude oil have significantly affected the production chain. These chemicals are essential for manufacturing widely used medicines like aspirin, paracetamol, penicillin, antibiotics, antihistamines and sedatives. Industry sources indicate that current domestic stocks are sufficient for only two to three months. They have also warned that prolonged tensions could lead to shortages in the supply of Active Pharmaceutical Ingredients (APIs) imported from China.

Taking advantage of the current situation, suppliers of petrochemicals have reportedly created artificial shortages, driving up prices and increasing production costs for pharmaceutical companies. Prices of plastic components used in diagnostic equipment have surged by nearly 50% over the past two weeks. Additionally, rising costs of PNG gas used in the manufacturing of syringes and catheters have further added to the financial burden. In this context, pharma companies have urged the government to permit price hikes for essential medicines to offset escalating costs.

India exports a significant volume of generic medicines and vaccines to regions including the United States, Europe, Africa and West Asia. However, the ongoing crisis has sharply increased both production and logistics costs. With shipping routes through the Red Sea and Strait of Hormuz disrupted, cargo is now being rerouted via the Cape of Good Hope, leading to a two- to three-fold increase in container charges and a 15–30% rise in air freight costs. Transit times have also extended by 10–15 days. Industry experts warn that continuing exports under pre-agreed pricing contracts could result in substantial losses. They suggest that government intervention through regulation of raw material prices and subsidies on elevated logistics costs is essential to help the sector navigate the current challenges.