As West Asia Conflict Drags On, India's Pharma Sector Faces Supply Chain Disruption

By Gautam Debroy

New Delhi: The ongoing West Asia conflict is starting to impact India’s pharmaceutical supply chain. Industry leaders suggest that the disruption in importing active pharmaceutical ingredients (API) may increase the prices of key starting materials (KSM).

Industry experts believe that if the war continues for more than 10-15 days, it will be a major cause for concern. “The ongoing war has already started impacting India’s pharma industry. And if the war continues for more than 10-15 days, it will be a major cause for concern,” Vinod Kalani, advisor to the Confederation of Indian Pharmaceutical Industry (CIPI) told ETV Bharat on Wednesday.

As per the latest data from the Ministry of Chemicals and Fertilisers, in 2024-25, India imported 200 categories of APIs, bulk drugs, and drug intermediates worth approximately US$ 4.35 billion, from more than 10 countries. Interestingly, China accounted for about 73.7 per cent of these imports.

According to the ministry, potential risks related to API imports arising from geopolitical uncertainties include single-source vulnerability, price volatility and predatory pricing. “Such single-source vulnerabilities threaten self-reliance and pharmaceutical security, as experienced during the COVID-19 period,” the ministry said.

High Import Dependence

Therapeutic segments with high import dependence include antibiotics, anti-fungal, antiamoebic, antidiabetic, gastrointestinal disorders, endocrinal and hormonal disorders, cardiovascular, oncology, female infertility, contraception, neurology/substance use disorders and essential amino acid deficiency.

Therapeutic segments are classifications of disease areas that drugs are designed to treat, with primary focus on high-demand areas like oncology, cardiology, immunology, and neurology.

According to data provided by the Directorate General of Commercial Intelligence and Statistics (DGCIS), the share of API imports from China during 2024-25 was 73.71 per cent, followed by the European Union (13.64 per cent), Singapore (2.49 per cent), the United States (1.96 per cent), Japan (1.82 per cent), Switzerland (1.03 per cent), Mexico (0.80 per cent), the UK (0.76 per cent), Hong Kong (0.53 per cent), Malaysia (0.51 per cent) and others (2.75 per cent).

Impact Of West Asia Conflict

Industry experts believe that the ongoing conflict between Iran and US-Israel is now affecting India’s pharmaceutical supply chain by increasing the cost of raw materials used in drug manufacturing.

“The prices of KSMs, APIs and API intermediates have started rising,” said Vinod Kalani, advisor to the CIPI. According to him, major causes behind the rise in cost of several inputs, are currency fluctuations, higher petroleum-linked costs, and emerging disruptions in global shipping over the last few weeks.

According to the Pharmaceuticals Export Promotion Council of India, a major disruption of exports in March could result in a potential loss of around Rs 2,500-Rs 5,000 crore for India's pharmaceutical industry.

As per data, 65-70 per cent of WHO’s vaccines (essential immunisation schedule) are sourced from India. “10 out of the top 25 global generics are from India, whereas the US — with over 31 per cent of our global export — is the largest destination,” the Pharmaceuticals Export Promotion Council of India said.

According to Kalani, containers carrying pharmaceuticals are stranded at several places, creating logistical issues. “The war has already started making its impact on the export of India-made pharmaceutical products,” he said.

Medicine Price Hike In Horizon

“There is no immediate impact of the war on Indian consumers, because the MRP is fixed. However, the manufacturers will have to bear higher costs,” said Kalani.

According to him, consumers may feel the impact of the crisis, only if there is a shortage of medicine in the market. “If a necessary medicine is not available in the market and is also very costly, it will have a direct impact on consumers. As of now, there is no such crisis and we are keeping a close watch on developments,” said Kalani.

Kalani said that CIPI may approach the National Pharmaceutical Pricing Authority (NPPA) to consider hiking medicine prices if the situation gets worse. “We are closely monitoring the situation. If necessary, we will approach the concerned authority regarding increasing medicine prices,” said Kalani.

The NPPA is an independent regulator for pricing drugs and for ensuring the availability and accessibility of medicines at affordable prices. It was constituted through a Government of India Resolution as an office attached to the Department of Pharmaceuticals (DoP), Ministry of Chemicals & Fertilizers. NPPA’s key responsibilities include fixing and revising drug prices as per the provisions of the Drugs Prices Control Order (DPCO), monitoring compliance and availability of drugs, and rendering advice on pharmaceutical policies.

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