The ongoing conflict involving Iran is beginning to significantly impact the pharmaceutical industry, with a sharp rise in the cost of raw materials used to manufacture common medicines such as paracetamol.
At the core of the issue is a surge in global crude oil prices and disruptions in key supply routes, particularly the Strait of Hormuz — a critical channel for energy and chemical shipments. These disruptions have triggered a cascading effect across industries, including pharmaceuticals, which rely heavily on petroleum-based inputs.
Rising Input Costs
Pharmaceutical manufacturers are witnessing a steep increase in the prices of essential raw materials. In some cases, the cost of paracetamol inputs has nearly doubled — rising from around ₹235 per kg to ₹470 per kg.
Other drug ingredients and chemicals have also seen sharp hikes:
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Active pharmaceutical ingredients (APIs) and solvents have risen by 20–30%
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Some raw materials have surged by over 60%
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Petrochemical-based inputs, crucial for drug formulation, are becoming increasingly expensive
These increases are largely driven by higher oil prices and supply shortages, as well as increased freight and logistics costs.
Supply Chain Disruptions
The conflict has disrupted global shipping and logistics networks, leading to:
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Shortage of container ships
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Delays in importing raw materials from key suppliers like China
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Freight charges doubling, with additional war-risk surcharges
Since India depends heavily on imported inputs for drug manufacturing, these disruptions are putting pressure on domestic production and supply chains.
Impact on Pharma Industry
The pharmaceutical sector is now facing a dual challenge:
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Rising production costs due to expensive raw materials
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Limited ability to raise prices because many medicines are price-regulated
So far, most companies have not increased retail prices, meaning they are absorbing the additional costs. However, industry experts warn that this may not be sustainable if the conflict continues.
There are also concerns about:
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Potential shortages of key drugs
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Reduced export volumes, especially to West Asia and Africa
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Financial strain on smaller manufacturers
Broader Economic Ripple Effect
The crisis is part of a larger global economic disruption caused by the conflict. Rising energy prices are affecting multiple sectors, from chemicals to packaging, all of which feed into pharmaceutical production.
What Lies Ahead
While medicine prices have remained stable for now, experts caution that prolonged geopolitical tensions could eventually lead to higher drug prices for consumers. The longer the conflict persists, the more likely it is that pharmaceutical companies will pass on the increased costs.
In essence, a geopolitical crisis is translating into a public health concern — with even basic medicines like paracetamol caught in the crossfire of global supply chain disruptions.