The Medicine Cabinet at Risk: How the Iran War Is Disrupting the Global Drug Supply Chain
Britain is weeks away from drug shortfalls. The U.S. gets nearly half its generic prescriptions from India. Indian pharmaceutical manufacturing depends on Gulf oil routes that are now severely disrupted. The chain connecting a Middle Eastern chokepoint to American medicine cabinets is shorter than most people realize.
The Supply Chain Nobody Mapped
The connection between the Strait of Hormuz and a U.S. pharmacy counter is less obvious than it might seem — and more direct than most consumers realize. The United States gets roughly 47 percent of its generic prescriptions by volume from India, according to Rohit Tripathi, vice president of industry strategy for manufacturing at RELEX Solutions, a supply chain planning software company with pharmaceutical sector expertise, as reported by CNBC. India, in turn, depends on the Strait of Hormuz for around 40 percent of its crude oil imports, according to CNBC.
That oil ultimately feeds the petrochemical inputs used throughout pharmaceutical manufacturing. "So even though American consumers are not buying medicines directly from the Gulf, they are still at the end of a supply chain that runs through it," Tripathi told CNBC. Multiple ingredients needed to manufacture many drugs in India often travel through Gulf logistics hubs first. Chemical inputs produced in China are commonly consolidated by distributors in places like Dubai and across the UAE before being shipped to Indian drug manufacturers, per CNBC.
Generic drugs — which represent 90 percent of prescriptions filled in the U.S., per Dr. William Feldman, associate professor of medicine at the David Geffen School of Medicine at UCLA, in comments to CNBC — are the most exposed category. Generics operate on the thinnest profit margins, meaning even modest increases in input or shipping costs can make manufacturing economically unviable or trigger rationing decisions.
The UK Warning: Weeks, Not Months
Britain issued the starkest warning yet. Mark Samuels, chief executive of Medicines UK — the trade association representing manufacturers of off-patent generic drugs, which make up 85 percent of NHS medications — told The Guardian that drug shortages could emerge within a few weeks if the conflict continued. Medical distributors typically stock six to eight weeks of inventory to avoid shortfalls, while suppliers to English hospitals are required to hold eight weeks' worth, per The Guardian.
David Weeks, director of supply chain risk management at analytics group Moody's, described the situation to The Guardian as "the perfect storm." He cited the confluence of Gulf conflict shutting down the Strait of Hormuz, India's central role as the world's generic drug supplier, and the difficulty of rerouting pharmaceutical shipments away from Dubai, Doha, and Abu Dhabi, which were initially closed and are now operating on limited schedules.
The UK makes about a quarter of its medicines domestically, with roughly a third coming from India and another third from the EU, per The Guardian. The US-Israel war on Iran has doubled air freight costs, Samuels told The Guardian. "One in five NHS medicines comes in by air, and currently manufacturers are trying to absorb those costs," he said. "But they've got historically low margins, and the risk is that it makes some medicines lossmaking to supply to the NHS."
What Drugs Are Most Vulnerable
Air cargo is disproportionately critical for specific medication categories. Certain medicines must be transported by air for speed, including expensive treatments for cancer and infectious diseases; high-tech cell and gene therapies; biologics with living materials that require cold storage; and drugs used in clinical trials, according to The Guardian. Frank Van Gelder, secretary general of the non-profit Pharma.Aero, told The Guardian that air cargo levels dropped 80 percent earlier in March and were still down sharply as of late March.
Cold-chain medicines — those requiring temperature-controlled transport — are especially at risk. Most cold-chain medicines move by air cargo, and airlines cannot simply add new capacity overnight if routes stay disrupted, according to a supply chain analyst cited by Healthbeat. "I don't think European airlines, or the two major African ones that have stepped in, will enhance their cargo carrying capacity by buying new planes just because this may continue for a few more months," the analyst told Healthbeat.
Specific ingredients face their own supply pressure. Glycerin, a common medication ingredient that is petroleum-based, could be impacted if oil supplies remain choked off, according to Dr. Marc Kahn, former dean of the University of Nevada, Las Vegas medical school and current chief of hematology, in comments to CNBC. Acetaminophen — the active ingredient in Tylenol and many pain relievers — is traditionally manufactured from phenol, a chemical derived from petroleum, Kahn noted to CNBC.
Air Cargo Rates and the Cost Pass-Through
Air cargo rates from India have reportedly climbed 200 to 350 percent for some routes, according to Steve Blough, chief supply chain strategist at Infios, a supply chain execution software firm, in comments to CNBC. Most pharmacies and wholesalers operate on a just-in-time inventory model for generic drugs, meaning that sustained disruption could start showing up for consumers within four to six weeks — first as shortages or delays for high-volume generic drugs — Tripathi told CNBC.
Transport by sea is an alternative for stable, generic drugs, but because ships must now sail around the Cape of Good Hope to avoid the Gulf, it adds 14 days to the journey and approximately $1 million in additional fuel costs per voyage, according to Wouter Dewulf, professor at the Antwerp Management School and expert in pharma logistics, as reported by The Guardian. Dewulf said the situation was currently "not disrupted, but disturbed," and that drugmakers were expected to pass higher costs on through single-digit price increases if conditions worsen. "Everything depends on how long the war lasts," he told The Guardian.
Petrochemical inputs used in drug production — methanol and ethylene — face their own price pressures as crude oil and natural gas prices rise. These chemicals are needed to manufacture active pharmaceutical ingredients, as well as syringes, vials, tubing, gowns, and goggles, according to Van Gelder, speaking to The Guardian. "So the overall ripple effect on industry and in this case the life science and pharma industry is significant," Van Gelder said. He noted that the cost would ultimately be borne by patients, either directly or through public health systems. "So in the end we all pay more, right?" he told The Guardian.
The U.S. Buffer — And Its Limits
The United States has somewhat more insulation than the UK. The U.S. largely retains uninterrupted Suez Canal shipping flows compared to the heavily Gulf-dependent Middle East corridors, and extensive inventory buffers mean imminent medicine shortages are unlikely in the immediate term, according to Think Global Health, a Council on Foreign Relations publication. However, it noted that "pharmaceutical supply-chain vulnerabilities exposed by the conflict — a dependence on specific transport hubs, fragile cold chains, and emergency supply systems — highlight the need for a longer-term investment in the diversification and streamlining of pharmaceutical supply chains."
Dr. Feldman of UCLA told CNBC: "India and China are the biggest suppliers of generic drugs to the U.S., and prolonged or widening conflict could raise costs for generic firms, leading to higher prices and/or shortages for patients." He expressed particular concern about generic drugs, which represent 90 percent of U.S. prescriptions but deliver thin profit margins for manufacturers.
U.S. Treasury Secretary Scott Bessent told CNBC in mid-March that the U.S. was allowing Iranian tankers to transit the Strait of Hormuz to supply countries including India, a measure that offered some short-term relief to the Indian pharmaceutical supply chain. However, with the strait still operating under severe restrictions and diplomatic resolution uncertain, supply chain experts say the pharmaceutical system's resilience will be tested the longer the conflict persists.