Worried About Petrol, LPG, Urea? Wait Till The West Asia Crisis Hits The Pharmaceutical Sector

By Gautam Debroy

New Delhi: The Centre has declared that India has a 4-5 month buffer stock of essential medicines. But experts say the Strait of Hormuz blockade and West Asia tensions have already started hitting India’s pharmaceutical sector.

“The Strait of Hormuz blockade and Middle East tensions have spiked cost of plastics, which are inputs for medical devices, by nearly 50 per cent. Price of PNG gas, used to generate power and heat processes, have doubled, eroding thin margins on essentials like syringes and catheters,” said Rajiv Nath, Forum Coordinator, the Association of Indian Medical Device Industry (AiMeD) to ETV Bharat.

Already, the Pharmaceutical Export Promotion Council of India (Pharmexcil) has appealed to the Centre to provide freight subsidies and logistical support to manage the rising costs due to the conflict. “We are closely monitoring the situation and exploring alternative logistics options and diversifying shipping routes to minimise business disruptions,” said Raja Bhanu, director general of Pharmexcil.

Even the Federation of Pharma Entrepreneurs (FOPE) has appealed to the Centre for urgent intervention regarding the exponential price surge and artificial scarcity of APIs, PVC, and packaging materials. In a letter written to Manoj Joshi, secretary in the Department of Pharmaceuticals under the Ministry of Chemicals and Fertilisers, the forum called for immediate ceiling prices on key APIs and packaging materials to prevent predatory pricing.

The forum also appealed for a mandate for clear reporting of stock levels from manufacturers of active pharmaceutical ingredients (APIs) and major packaging suppliers.

“We have also asked the government to provide a temporary ‘force majeure’ price adjustment for scheduled formulations to account for the extraordinary rise in input costs, given the complexity of the present situation and the involvement of multiple segments of the pharmaceutical value chain,” said Vinod Kalani, a senior member of FOPE.

The Crisis: Unprecedented Price Volatility

FOPE has also said that in a span of just 8-9 days, the pharmaceutical formulation sector has been hit by a catastrophic surge in the prices of critical inputs. In fact, key raw materials like APIs have seen a 20-60 per cent surge.

“There also are emerging concerns regarding irregular supply of solvents and chemical intermediates that are essential for the pharmaceutical manufacturing processes. Any prolonged disruption in the availability of these materials could affect production planning across formulation units,” the federation said.

How the West Asia crisis affects India's pharma industry (ETV Bharat)

Prices for PVC compounds, bottles, films, Alu-Alu (aluminum packaging for medicines), and foils have escalated multifold, rendering existing production contracts unviable. In addition, the industry is also witnessing noticeable increases in the prices of certain paper-based packaging inputs widely used for cartons, labels, and outer packaging of medicines. This broad-based increase across multiple packaging segments is placing further financial strain on formulation manufacturers.

APIs And Hormuz

Many essential medicines like aspirin, paracetamol, penicillin, antibiotics, antihistamines, sedatives, and anesthetics are derived from petrochemical feedstocks like benzene, toluene, ethylene. These compounds provide the chemical building blocks for synthesising APIs, enabling cost-effective, large-scale drug production.

While 1-3 week shipment delays are manageable via buffers, prolonged disruptions risk production halts, hospital shortages, and costs due to inflated prices from market abuse by dominant large raw materials players, said AiMeD's Rajiv Nath.

“Urgent government action is needed to safeguard more than five lakh jobs, Aatmanirbhar Bharat’s healthcare affordable access and additionally exports to the US and EU,” Nath said.

According to renowned health and pharma expert, Dr Tamorish Kole, India’s dependence on supply routes like the Strait of Hormuz is a genuine concern, but not a new one.

“The country has some buffering capacity through diversified sourcing, domestic production, and policy interventions. The bigger structural issue for Indian pharma remains dependence on imported intermediates (especially from China), rather than crude-linked feedstocks alone,” said Dr Kole, who is also the past president of the Asian Society for Emergency Medicine.

Temporary petrochemical disruptions may raise costs and strain supply chains, yet essential medicines typically have buffer stocks and government oversight, he said.

“The most critical point is the cascading nature of risk — energy, fertilisers, packaging, and pharmaceuticals are interconnected. For India, this could mean rising drug prices and selective shortages, rather than a sudden crisis. The focus should be on preparedness: Strengthening domestic manufacturing, diversifying supply chains, and maintaining strategic reserves of essential medicines,” said Kole.