The Iran war and pharmaceutical supply

When the Iran war began on 28 February 2026 and shipping through the Strait of Hormuz came under threat, several industry bodies warned of imminent medicine shortages and large-scale disruption. QYOBO took its usual data-driven approach.

On day one, we checked which of the roughly 10,000 pharmaceutical manufacturing sites worldwide sit in the conflict zone, and whether alternative supply chains exist for what they make. That came to 66 sites across Israel and the U.S.-allied countries in the region, and only two orphan drugs carried a genuine single-source risk, because their API is made at a single site with no alternative. A month into the war, Teva’s Neot Hovav facility in southern Israel, one of its largest and a source of around 300 active ingredients, came within range of an Iranian missile salvo on 31 March 2026 and reported no damage and no production impact. From day one, the real exposure was far narrower than the warnings implied.

The QYOBO platform then tracked the situation as it developed. Every public report on the conflict was captured the moment it appeared and connected to the companies, products and sites it named or affected, then combined with QYOBO’s own data on what each site makes and who depends on it downstream. As the war unfolded, news, local policy moves and company disclosures were merged continuously into that single view, so a client following metformin, or following Teva, saw the developments that touched their own supply chains as they happened and could act on them.

1. HOW THE WAR INFLUENCED PHARMA SUPPLY CHAINS

Pharma supply chains were affected through two routes: the cost of goods, via energy and feedstock, and the cost of freight.

Energy and feedstock: India imports nearly 60% of its liquified petroleum gas (LPG), about 90% of it through the Strait of Hormuz, and the closure immediately cut into commercial gas allocations. By late March, pharmaceutical units in Madhya Pradesh saw piped gas reduced to 65% of normal. The same disruption pushed up energy and petrochemical prices across the board, with crude rising from about USD 70 to as much as USD 120 a barrel. In early April, India’s Department of Pharmaceuticals flagged methanol and propylene (the feedstock for isopropyl alcohol and the ibuprofen precursor isobutyl benzene), as the solvents most at risk.

Freight: Sea and air freight both tightened. Pharmexcil, India’s pharmaceutical export promotion council, reported in early March that charges had roughly doubled, with per-shipment surcharges of USD 4,000 to 8,000, as cargo rerouted around the Gulf; Indian pharmaceutical exports fell over 23% in March 2026. They recovered as routes reopened: April exports rose about 7% year on year to USD 2.66 billion. Airspace closures across Israel, the Gulf and Iran, reported by the European Directorate for the Quality of Medicines on 11 March, cut air-cargo capacity, and Lufthansa Cargo extended booking restrictions into April (one in five NHS medicines arrives by air, by Medicines UK’s estimate).

1.1 A REAL-WORLD EXAMPLE: METFORMIN

Metformin shows what this looked like in practice. The drug is one of the world’s most widely used diabetes medicines, and it is made almost exclusively in India. Its key starting materials are dimethylamine (derived from ammonia) and cyanoguanidine.

On 12 March 2026, Balaji Amines reported force-majeure plant shutdowns. Balaji sits at the dimethylamine step, so the shutdown raised the obvious question for anyone downstream, and on the QYOBO platform the answer was already visible: the company and plant were connected to the metformin chain before the news broke. Every finished-dose maker and downstream buyer linked to that chain could see their exposure at once, without tracing the steps by hand.

Some of India’s ammonia comes from Qatar and was disrupted by the closure, but India kept its own ammonia running. The Department of Fertilisers reported on 9 April 2026 that it was not under strain, and the same inputs can be sourced through other routes or made within India. So for finished metformin the question was commercial, not one of availability: whether generic makers could absorb a few weeks of higher freight and feedstock costs, or pass them on without curtailing supply.

1.2 INDIA’S POLICY RESPONSE

New Delhi moved quickly to keep inputs flowing. On 2 April the government granted full customs-duty exemption on 40 critical petrochemicals (including methanol, anhydrous ammonia, toluene and styrene) through 30 June 2026, and reallocated gas toward households and priority sectors including pharmaceuticals, restoring national commercial LPG supply to about 70% of pre-crisis levels. A 1,000 MT per day LPG pool was set aside for pharma and chemical firms, and the RELIEF scheme (INR 497 crore, approximately USD 52 million), approved 19 March, extended war-risk export cover. In mid-April the Department of Pharmaceuticals weighed a temporary 10 to 15% rise in select essential-medicine ceiling prices to offset higher input costs. Trade policy added a structural hedge against the chokepoint itself: the India-Oman economic partnership, in force from 1 June 2026, gives pharmaceutical exports zero-duty access to the Gulf while routing around the Strait of Hormuz.

1.3 WHY THE WAR DID NOT CAUSE WIDESPREAD SHORTAGES

With the exception of those two orphan drugs, no drug depended on a single-sourced supply chain in the conflict zone. For the generic drugs made in India, competition is healthy, both from within India and abroad, so any maker that stopped delivering risked losing market share. That made absorbing a few weeks of higher freight cost, manageable in the bigger picture, the rational choice over halting supply.

Several industry associations and lobby groups warned of widespread shortages, but the clearest sign that shortages were unlikely came from the companies themselves. In their latest financial reports, released in April 2026 and May 2026, the most exposed Indian and Israeli manufacturers did not flag the war as material. Dr. Reddy’s (12 May 2026) posted its highest-ever annual revenue and made no mention of West Asia or Hormuz. Sun Pharma (22 May 2026) reported sales up 13.6% and net profit up 26.2% with no reference to the conflict. Cipla (13 May 2026) did not name the war either. On Zydus’s earnings call (19 May 2026) an analyst raised the geopolitical environment and supply-chain costs, yet neither the question nor management referenced Iran or Hormuz directly. Teva’s CFO (29 April 2026) said operations remained uninterrupted with no material impact on 2026 guidance.

The United Kingdom showed how cost was absorbed rather than converted into shortage. The government reported no medicine shortages from the conflict, and Medicines UK, which represents most NHS prescription medicines, said its shortages tracker was at its lowest level in more than three years. What rose instead was the drug sales price: UK price concessions climbed from 174 in February 2026 to 197 in March 2026, some involving eight-fold increases, as the reimbursement system paid more to keep generics in stock. A weaker rupee, near 95.7 to the dollar, was on balance a tailwind for India’s dollar-earning exporters.

2. ASSESSMENT

The overall impact on the pharmaceutical industry was moderate and largely financial. The war raised freight, energy and feedstock costs and pushed some input and finished-drug prices up for a period, but it did not translate into broad shortages: existing inventory, healthy generic competition, and targeted Indian policy relief absorbed the shock, and prices have since normalised across several transit routes as rerouting matured and the Hormuz disruption eased. The exceptions were narrow and known from the outset, the two single-source orphan drugs.

For decision-makers in the pharmaceutical industry, the value lies in seeing this clearly and early. Connecting each news item, policy move and company disclosure to the specific sites, products and supply chains it affected made it possible to tell genuine exposure from noise. Rather than react to attention-grabbing headlines, those monitoring the full picture could weigh their actual exposure day by day and decide what, if anything, to do.