India’s Pharma Industry Hit By Raw Material Shortage Amid US-Israel–Iran Conflict
The Indian pharmaceutical industry is struggling with a shortage of essential raw materials for the past two months.
Published : April 9, 2026 at 6:19 PM IST
Indore: India’s pharmaceutical sector is facing a slowdown due to the ongoing conflict between the United States, Israel, and Iran. Apart from petrol and LPG gas, the war has led to an increase in the prices of raw materials used in drug manufacturing as well, particularly those sourced from China. The cost has gone up between 40% and 100%, which is expected to disrupt supply chains.
According to JP Mulchandani, President of the Basic Drug Dealers Association, Indore, the Indian pharmaceutical industry has been struggling with a shortage of essential raw materials for the past two months. He said that India is dependent on China for pharmaceutical intermediates and active ingredients.
"This is a stressful situation for the pharma market. There’s an estimated loss of $750 million. It has increased shipping costs, and the supply chain has been disrupted. It has also resulted in reduced production and exports," Mulchandani said.
The escalation in raw material prices has increased transportation and logistics costs as well. As a result, the National Pharmaceutical Pricing Authority (NPPA) has approved a price hike of up to 0.6% for more than 1,000 medicines listed under the National List of Essential Medicines (NLEM). Following this decision, 667 categories of medicines have already become costlier. These include commonly used drugs such as painkillers, antibiotics, antipyretics, and medicines for heart disease and diabetes.
Raw materials for medicines consist of intermediate chemicals, which are compounds formed at various stages of the drug manufacturing process. These intermediates help in producing the final pharmaceutical product. Commonly used substances include acetone (a solvent), benzyl chloride, acetic anhydride, diethyl ether, acetic acid, and ethanol.
Additionally, heterocyclic intermediates containing nitrogen, oxygen, or sulfur rings are important for manufacturing antibiotics. Fluorinated intermediates enhance drug absorption, while nucleoside intermediates are essential in the production of antiviral and anticancer medications. Binding agents are also used to convert powdered substances into tablet form.
Mulchandani further said that drug dealers in Madhya Pradesh have only two months’ worth of stock due to the shortage of raw materials. As pharmaceutical companies are forced to procure inputs at nearly double the price, medicine costs are likely to rise further in the coming months.
To mitigate the impact on the pharmaceutical sector, Nirmal Jain, Secretary of the Indore Drug Market Association, said that the Government of India has waived the 8.25% customs duty on 40 critical raw materials used in drug manufacturing. This relief measure will remain in effect from April 2 to June 30, 2026.
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