The Hormuz standoff shows that India’s role as the pharmacy of the world depends not only on drug factories, but also on secure access to energy, petrochemicals, solvents, packaging materials and logistics
India's pharmaceutical sector holds a prominent position in the global health architecture, ranking third in the world by pharmaceutical production volume, operating over 2,000 WHO-GMP-approved manufacturing facilities, and hosting more USFDA-compliant plants than any country outside the United States. Pharmaceutical exports reached US$ 30.47 billion in FY2024–25, with year-on-year growth of 9.4 percent, and exports between April and February in FY26 reached US$ 28.29 billion, a further 5.6 percent above the previous year, according to industry sources. Pharmaceutical products from Indian manufacturing units reach almost every country in the world, and more than 60 percent of exports are destined for highly regulated markets, with the United States accounting for 34 percent and Europe for 19 percent. Within low- and middle-income country markets, India's centrality is even more pronounced. Indian manufacturers account for 379 of the 563 WHO-prequalified pharmaceutical products, covering HIV/AIDS, tuberculosis, malaria, hepatitis, and neglected tropical diseases. Therefore, the operational integrity of this manufacturing system is, in practice, a precondition for global pharmaceutical supply security.
Modern pharmaceutical production is highly dependent on petrochemical feedstocks, and analysts estimate that a substantial proportion of manufactured medicines rely on petrochemicals for their synthesis, packaging, or delivery.
The closure of the Strait of Hormuz, following the military escalations in the region since the end of February 2026, has subjected this system to a stress test that differs materially from previous supply disruptions. India imports 88 percent of its crude oil and 50 percent of its natural gas from West Asia, with approximately 40 percent of its crude imports transiting through the Strait of Hormuz. Modern pharmaceutical production is highly dependent on petrochemical feedstocks, and analysts estimate that a substantial proportion of manufactured medicines rely on petrochemicals for their synthesis, packaging, or delivery. The energy disruption triggered by the Hormuz stand-off therefore affects pharmaceutical production itself rather than merely the transit of finished products.
Within 15 days of the Strait's effective closure, raw material costs for pharmaceutical manufacturers rose by 200 to 300 percent, according to representations submitted to the government by manufacturing bodies. The cost of raw materials used in paracetamol production rose from INR 250 to INR 450 per kilogram within that fortnight. Active pharmaceutical ingredients, solvents, excipients, and packaging materials were all affected during the same period, with no single input category insulated from the upstream energy shock. In addition, price increases of up to 20 percent were announced, citing rising energy and raw material costs. QatarEnergy’s declaration of force majeure and the consequent halt in the downstream production of polyethene, polypropylene, and PVC introduced a separate constraint on the supply of materials foundational to pharmaceutical packaging and delivery systems.
A major dimension of this domestic disruption is the industrial shortage of liquefied petroleum gas (LPG), which is required for pharmaceutical manufacturing operations, including boiler heating, granulation, and sterilisation. Following disruptions in supply, representations submitted to the Department of Pharmaceuticals estimated that nearly 200 manufacturers faced possible production halts, following which the Union government increased commercial LPG allocations to the states.
Customs duty has been reduced to zero on 40 petrochemical products used in pharmaceutical manufacturing, while inter-departmental coordination within the government to secure the feedstocks and solvents required by medicine manufacturers has been ongoing.
The Government of India’s response to the potential pharmaceutical disruption caused by the Hormuz stand-off has been framed around continuity of production. The Department of Pharmaceuticals has acknowledged that the West Asia crisis has affected global supply chains for pharmaceutical inputs, especially solvents and APIs, and has focused on preventing shortages at the input stage. Customs duty has been reduced to zero on 40 petrochemical products used in pharmaceutical manufacturing, while inter-departmental coordination within the government to secure the feedstocks and solvents required by medicine manufacturers has been ongoing. Propylene has received particular attention because it is used to produce isopropyl alcohol and isobutyl benzene, which are used in medicines such as ibuprofen. The government had also moved to stabilise supplies of ammonia, methanol, and methylated ammonium products, which are relevant for medicines including metformin and aspirin, while temporarily suspending the Quality Control Order for morpholine to ease access to another important input used in life-saving drugs. The Petroleum Ministry stated in March 2026 that diversification of sources had raised the share of crude imports coming from routes outside Hormuz to about 70 percent, compared with about 55 percent earlier. These measures have helped ease supply constraints.
Official trade data, which are available until March 2026, do not show signs of a severe shock in month-on-month pharmaceutical imports or exports. However, as more recent data become available, this may change. The outward consequences of pressure on India's manufacturing system fall most severely on markets with the least capacity to absorb them. Industry estimates suggest that approximately US$ 2 billion of India’s pharmaceutical exports face immediate logistical risk due to disruptions along the West Asia route, with around 6 percent of total export value destined for West Asia passing through Hormuz-bound routes. India is a major exporter of pharmaceutical products in the region and, for example, supplies approximately 40 percent of Iran's generic medicine requirements. There are reports that disruption to the Dubai logistics hub, through which Indian pharmaceutical exports are consolidated and redistributed to markets across Africa, the Middle East, and parts of Asia, has severed both the inbound flow of Chinese pharmaceutical intermediates into India and the outbound distribution of finished medicines. Air freight rates from India to key export destinations have surged by up to 400 percent. Rerouting via Africa's Cape of Good Hope adds 10 to 20 transit days to surface shipments — a delay that is operationally critical for temperature-sensitive products, including biologics, vaccines, insulin, and oncology treatments, that must be maintained within a 2°C to 8°C cold chain throughout transit.
Official trade data, which are available until March 2026, do not show signs of a severe shock in month-on-month pharmaceutical imports or exports. However, as more recent data become available, this may change.
For low- and middle-income country health systems, the implications are severe, as there is no alternative supply base available that is simultaneously prequalified and priced within medicine budget constraints. The WHO's operational exposure illustrates the severity of the disruption for low-income and emergency contexts. Its Global Health Emergencies Logistics Hub in Dubai, which fulfilled over 500 emergency orders for 75 countries in the preceding year, was placed on hold due to airspace closures and Strait of Hormuz-related cargo restrictions. As of March 2026, US$ 18 million in humanitarian health supplies were blocked from reaching their destinations, and a further US$ 8 million in shipments were stranded, with more than 50 emergency supply requests from 25 countries remaining unmet, including US$ 6 million in medicines for Gaza and US$ 1.6 million in polio laboratory supplies that were being held up.
The Hormuz stand-off points towards the need for a coordinated manufacturing security framework that treats pharmaceutical production inputs, including energy, industrial gas, and petrochemical feedstocks, as health security assets.
A clearer picture of the manufacturing disruption and its impact on pharmaceutical trade will emerge only in the coming weeks when more recent data become available. However, the Hormuz stand-off points towards the need for a coordinated manufacturing security framework that treats pharmaceutical production inputs, including energy, industrial gas, and petrochemical feedstocks, as health security assets. These inputs warrant strategic reserves or supply-prioritisation arrangements comparable to those applied to finished medicines. For a country whose generic exports underpin affordable access to medicine for a significant share of the world's population, and whose manufacturers supply the majority of WHO-prequalified products procured by international agencies for the most vulnerable patient populations, ensuring the adequacy of such a framework is a global health governance priority.
Oommen C. Kurian is Senior Fellow and Head of the Health Initiative at the Observer Research Foundation.
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Oommen C. Kurian is Senior Fellow and Head of the Health Initiative at the Inclusive Growth and SDGs Programme, Observer Research Foundation. Trained in economics and ...
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