Middle East conflict threatens pharma supply chains and drives cost pressures

Disruption linked to tensions involving Iran is rippling through global pharmaceutical supply chains, raising costs and exposing structural vulnerabilities in the United States medicines market.

While attention has focused on the potential reopening of the Strait of Hormuz, industry groups warn the longer-term impact may be more significant. Higher oil prices, disrupted air and sea routes and rising freight costs are feeding into the price of drug manufacturing and distribution.

The effects are most acute in generics, which account for more than 90 per cent of US prescriptions and rely heavily on overseas supply. India plays a central role, producing a large share of both finished medicines and active pharmaceutical ingredients, often at a fraction of US manufacturing costs.

Rising energy prices and transport delays are compressing already thin margins, increasing the risk of shortages and higher prices. Injectable and temperature-sensitive drugs are particularly exposed, as longer transit times raise the risk of spoilage.

The disruption also complicates efforts by the Donald Trump administration to onshore pharmaceutical production, given continued reliance on imported inputs.

Although stockpiles may cushion immediate shortages, analysts warn the combined effect of supply chain disruption and cost inflation is likely to feed through into higher drug prices across the US and Europe.