Pharma Exporters Face Potential Rs 5,000-Crore Revenue Hit Due to Escalating US-Iran Tensions

Pharmaceutical Exports to West Asia Face Significant Challenges

The Pharmaceuticals Export Promotion Council of India (Pharmexcil) has warned that a total stop to pharma shipments to West Asia this month alone could drain Rs 2,500–Rs 5,000 crore of export value, primarily due to freight rate hikes and logistical challenges.

Freight Rates Double Amid Worsening Conflict

Freight rates have doubled for exporters in the region, with steep surcharges of $4,000–$8,000 per shipment driving up logistics costs. The main reasons for the spike include heftier insurance premiums, fuel price increases, and operational delays caused by longer routes.

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Impact on India's Pharmaceutical Exports

The region accounts for 5.5% of India's pharma exports, valued at $30 billion. Higher crude prices and unpredictable transit times are also affecting active pharmaceutical ingredient (API) procurement costs and inventory distortions, stretching working capital cycles across both large and mid-sized pharma exporters.

Oil Prices Surge Following US-Israel Attack on Iran

Since February 28, when the US and Israel attacked Iran, the benchmark Brent has jumped nearly 16%. On March 6, Brent was trading close to $84 per barrel, rising from $72.48 on February 28.

Read also: US-Iran Tensions Spark Uptick in Oil Prices Amid Global Market Decline

Critical Shipping Corridors Disrupted

The war has disrupted the critical shipping corridor of the Strait of Hormuz, from where 50% of India's oil and 80% of natural gas flow through. The Red Sea and major Gulf channels essential for timely delivery of medicines, APIs, and temperature-sensitive formulations have also been hit.

Mitigation Measures Sought

The council is closely monitoring the situation and is in talks with logistics and trade partners to explore mitigation measures. It has urged greater government support, including freight-relief mechanisms and diversification of shipping routes, to ensure uninterrupted access to essential medicines in West Asia.