Will prices of Vitamins and Antibiotics rise?

The Iran conflict is disrupting global pharmaceutical supply chains, pushing up raw material prices. Experts warn vitamins, antibiotics, and other essential medicines could soon become costlier if the crisis continues.

War rarely affects only soldiers in battle. Everyday citizens seldom see the direct consequences of events taking place thousands of miles away. However, as Iran conflict escalates, experts are now warning that it might lead to shortages of raw materials, drive up freight costs and disrupt shipping routes. If that happens, common drugs such as vitamins, antibiotics and painkillers could cost more.

Supply Chains Disrupted For Pharma Manufacturing Units

One of the major implications that Iran crisis poses to the pharma sector is through global supply chains. Shipping lanes are being disrupted, containers are getting scarce and freight prices are skyrocketing worldwide. All this could lead to delayed transportation of pharma ingredients from one country to another.

India imports bulk of its Active Pharmaceutical Ingredients (APIs) as well as chemical solvents from China. Any hiccup in shipping leads to longer transit times, while expensive transportation means higher costs across the manufacturing process.

Industry sources indicate that shortage of containers and high freight charges are delaying imports of raw materials by importers. Several pharmaceutical manufacturing companies who source their critical raw materials from overseas are now beginning to feel the heat.

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Raw Material Prices Skyrocket

In addition to supply-side issues, there’s also the problem of skyrocketing raw material prices. Analysts estimate prices of some pharma inputs have already shot up by 20–30 percent over the past couple of weeks.

Some chemicals and solvents used for drug manufacturing come from petrochemicals. Middle-East tensions have already impacted global crude oil supply chains. Naturally, inputs sourced from petrochemicals are becoming expensive at a faster rate.

According to reports, prices of some pharma ingredients have witnessed a sharp increase over the past few weeks. The price of glycerine popularly used in medicine manufacturing increased by over 15 percent during the week ended May 22. Prices of paracetamol too registered a steep spike during the same period.

Drug manufacturers will now have to factor these increases while arriving at their production costs.

Medicines Could Cost More

Rising input costs and a weakening supply chain will mean that pharma companies will have no choice but to push some of these costs on to consumers.

Industry officials added that margins for drug manufacturers are already under pressure due to rising import and logistics costs. Since there is very little scope for medicine companies in India to absorb such shocks due to government controlled pricing policies, pharma companies pass on the brunt to the common man.

Prices of common medicines like vitamins, antibiotics and painkillers could rise if Iran crisis escalates further and supply chains remain disrupted for a prolonged period.

Government Intervention?

Pharma industry associations have already reached out to the regulator seeking relief from the government. Industry bodies have asked the government to permit manufacturers to trade a certain amount of margin so that they can absorb some of the increased input costs.

Analysts added that further escalation in the crisis could also lead to shortages of certain raw materials used in the manufacture of medicines. Most pharma companies follow “just-in-time” inventory model where they store minimal quantities of active ingredients in stock. In the event shipments get delayed beyond a certain period, companies could face shortages of certain drugs.

Patients to Be Affected

Patients across India and the world who consume medicines daily will be affected if prices start rising. Healthcare experts stated that authorities will have to keep a close tab on how things unfold to ensure that patients do not feel the pinch of this crisis.

It remains to be seen how far the Iran crisis escalates and impacts global pharma industry. However, one thing is for sure. Wars and conflicts are no longer confined to battlefields but are now affecting pharmacy shelves too.