The heightened geopolitical tensions in the Middle East, particularly concerning Iran, have led to widespread economic repercussions, significantly impacting the price of various goods globally. While the initial focus of this crisis was on the global supply of oil, gas, and fertilisers, recent observations by pharmacists indicate a notable surge in the cost of medicines and contraceptives.
For instance, in the United Kingdom, pharmacies are now charging 20 to 30 percent more for over-the-counter medicines, with the common painkiller paracetamol experiencing a more than fourfold price increase at one point. Similarly, in India, chemists have reported price hikes of up to 96 percent for common painkillers.
Why Are Medicine Prices Rising?
Since the early stages of the conflict, the Strait of Hormuz, a crucial waterway through which 20 percent of the world’s oil and liquefied natural gas (LNG) supplies typically pass, has faced disruptions. Experts suggest this has also severely impacted pharmaceutical supply chains, which are heavily reliant on oil supplies.
Frederic Schneider, a nonresident senior fellow at the Middle East Council on Global Affairs, explained that “Pharmaceuticals are tied to both petrochemical feedstocks, a large part of which are sourced through the Persian Gulf.” He added that logistics routes for pharmaceuticals, especially between East Asia and Europe, rely on transhipment stops in the Gulf, particularly Dubai. These routes are especially vulnerable due to the need for special handling, including an unbroken cold chain, both of which have been disrupted by the ongoing situation.
Wouter Dewulf, a professor and expert in pharma logistics at the University of Antwerp, warned that while pharmaceutical supply chains are not in immediate danger of collapse, medicines are highly exposed to air logistics. He noted that 35 percent of pharmaceuticals, and approximately 90 percent of critical or life-saving medicines and vaccines, move by air. Dewulf estimates that 22 percent of global air cargo flows are exposed to Middle East disruptions.
“The main global effect for now is delays, rerouting, and higher costs, rather than a worldwide physical shortage,” Dewulf stated. He anticipates “modest price increases on pharmaceuticals, because of the increase in air cargo fares, mainly on the east-west corridors,” with generic medicines, having thinner margins, potentially seeing a relatively higher price increase.
Which Pharma Products Are Most Affected?
Condoms: Goh Miah Kiat, CEO of Karex, the world’s leading condom producer, announced that prices would need to rise by 20 to 30 percent to cope with supply chain disruptions. He highlighted that many condom shipments destined for Europe and the US from his Malaysia-based company are currently delayed at sea, leading to shortages in various regions, including developing countries.
Paracetamol: Both UK and Indian pharmacies have reported significant price increases for paracetamol. An former board member of the Visakha Chemists Association in India attributed a 96 percent rise to a spike in raw material costs, predicting further increases. In the UK, the price paid by pharmacists to wholesalers for paracetamol tablets saw a substantial jump, though it has since partially eased.
Global Impact: Which Countries Are Most Vulnerable?
Frederic Schneider noted that the global impact would vary based on factors like the availability of alternative suppliers and strategic stockpiling. While countries like the US (with domestic hydrocarbon supply) and China (able to source elsewhere) might be less affected, India, a major pharmaceutical producer, is vulnerable due to its reliance on Gulf supplies.
The EU’s ‘solidarity mechanism’ and country-specific stockpiling requirements offer some resilience for Global North countries, though some, like the NHS in the UK, are already raising alarms about potential shortages. Schneider emphasized that the problem is more acute for Global South countries, particularly sub-Saharan Africa, which often lack sufficient stockpiles and financial capacity to absorb price increases. Countries experiencing humanitarian crises, such as Sudan, Yemen, and Palestine, are also at high risk.
Dewulf added that the real exposure is most significant in countries directly touched by the conflict and regional disruption, specifically naming Lebanon, Palestine, and Iran. He also identified fragile, aid-dependent nations as a second vulnerable group, and import-dependent Gulf markets (especially for cold-chain and cancer medicines) as a third, conditional risk group, noting rerouted flows when major hubs were affected.
Despite the challenges, Dewulf believes the situation in the broader Middle East is more manageable than in direct conflict zones, with risks and delays rather than a generalized collapse, partly due to the gradual return of airlift services and the priority given to pharmaceutical transport.
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