Overview

• Post By : Kumar Jeetendra


• Source: Microbioz India


• Date: 31 Mar,2026

The sustained tensions between Iran and the United States since 2026 have become increasingly severe, with impacts beyond military engagements, including an expansive global economic impact, and an effect on Asia’s pharmaceuticals industry, which is now one of the most impacted.

The Global Economic Impact of the War

The war has impacted one of the most important energy transit routes: the Strait of Hormuz, through which a large percentage of the world’s oil and gas flow. The closure of the Strait and conflicts on its borders has created oil and energy supply shocks, greatly increasing the price of oil and straining supply chains.

This has caused the following in Asia’s energy-importing economies:

1. Increased inflation
2. Increased energy and manufacturing costs
3. Increased pressure on the currency
4. Decreased growth

Massive uncertainty spans the range from India to Southeast Asia.

The Pharma Industry: A Silent Casualty

The media focuses on the impacts of war on oil and the defense industry, but now, in addition to them, the war is affecting the pharmaceutical industry and Asia, as a continent with a great number of large manufacturers of generic drugs, is becoming more vulnerable.

1. Increase in Raw Material Costs

Some materials needed to produce medicine come from petroleum. Due to the increase in oil prices:

1. The price of Active Pharmaceutical Ingredients (API) have increased significantly.
2. The prices for necessary medications such as Metformin and paracetamol have increased significantly.
3. The price of solvents, excipients, and wrapping materials is also increasing.

In India, the prices for some APIs have increased by almost 90%. This puts a lot of pressure on the companies manufacturing the drugs.

2. Supply Chain Issues

Logistics in the Middle East is very important for the distribution of medicine all over the world. There have been problems with:

1. The disruption of air cargo routes through the United Arab Emirates.
2. The disruption of shipping routes in the Persian Gulf and the Red Sea.
3. The disruption of the cold chain for biologics and vaccines.

Experts believe that if these problems continue, the distribution of medicines, the export of generic medicines, and the clinical trials will be negatively impacted.

3. Increase in Freight Costs, and Energy Costs

The manufacturing of medicines is very expensive. The increase in the price of fuels has:

1. Increased the costs of production.
2. Increased the costs of transport and the costs of insurance.
3. Decreased the profit margins of medicines with a controlled price.

Manufacturers from Asia, especially those in the Generics Industry, find it very difficult to absorb these costs.

Asia Pharma: Challenges Become Strategic Opportunities

In spite of all the challenges, there is now change occurring in the Asian pharmaceutical industry.

1. Supply Chain Diversification

Due to these challenges, countries have made efforts to:

1. Reduce reliance on Middle Eastern routes.
2. Strengthen the supply chains within their borders.
3. Increase investments in the production of APIs domestically.

India is likely to continue with “self-reliance” and China will also focus on manufacturing more, as these will be positive changes.

2. Emergence of Domestic-Focused Pharmaceutical Firms

Pharma players with strong domestic markets are more resilient due to:

1. Smaller impacts from export disruptions
2. Stable demand for staple medicines
3. Effective management of pricing and logistics

This type of risk diversification could reshape future investment patterns in the pharmaceutical industry.

3. Innovation and Strategic Stockpiling

Governments and firms are:

1. Creating strategic reserves for essential APIs
2. Financing alternative synthesis pathways
3. Investigating economical/green manufacturing and synthesis

The US–Iran Conflict in a Broader Perspective: A Structural Change

The US and Iran conflict is a continuous structural impulse, so if the war continues:

1. There will be a global increase in drug costs
2. There will be a decrease in available medicines required for patients to be healthy
3. Pharmaceutical companies will need to rethink global manufacturing

Even if the war ends, the impact will be felt for years, especially in the manufacturing and logistics, prices of energy, and the industry due to increased geopolitical risk.

Final Remarks

The US and Iran conflict has revealed the brittle interdependence of global markets. For the pharmaceutical industry in Asia, it has become both a stress test and a catalyst for change.

During this period of upheaval, one principle stands out clearly: the next era of pharmaceutical production will be defined by geopolitics and resilience, as opposed to merely science and innovation.