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Global pharmaceutical supply derailed by the closure of the Strait of Hormuz

A regional war that first threatened oil supplies is now threatening the lifeline of the healthcare industry: medicines.

The closure of the Strait of Hormuz is widely framed as an energy crisis, but its consequences extend far beyond oil. Beneath the headlines a larger, potentially more dangerous disruption is unfolding, and that is a global healthcare emergency driven by the breakdown of pharmaceutical supply chains.

At the center of this crisis lies the pharmaceutical industry which as long been known as a cornerstone of both global health and the modern economy. Valued at USD 1.74 trillion just last year, the industry is projected to grow to USD 2.78 trillion by 2033, thanks to deeply interconnected global supply networks.

While North America and Europe lead in innovation and market value, the Asia-Pacific region dominates manufacturing volume and growth. However, this dependence has exposed a critical vulnerability as many of the petrochemical inputs that sustain Asia’s production originates from the gulf.

Since the effective closure of one of the world’s most vital energy corridors, the supply of these essential materials has rapidly deteriorated. What initially appeared to be a disruption of oil flows has quickly cascaded into a shortage of the materials that keep medicines safe, stable, and usable.

At the core of this very disruption lies one of the industry’s most indispensable component: primary packaging. Unlike secondary packaging such as cardboard boxes, primary packaging refers to materials that come into direct contact with the drug itself. These include blister packs, IV bags, tubing, and injectable casings, most of which rely on petrochemical derivatives like PVC, polypropylene, and aluminium foil.

Because these materials are directly tied to the petrochemical supply; the Strait’s closure has triggered an immediate industry bottleneck. Without adequate packaging, even fully manufactured drugs cannot be safely distributed.

Hence, the first to feel the impact are generic medicines, or colloquially just referred to as generics. Produced on thin margins and dependent on high-volume manufacturing, generics are particularly vulnerable to such supply disruptions. These include essential, everyday medications such as blood pressure pills, pain relievers, antibiotics, and hospital-grade fluids.

The scale of this risk is immense. India alone supplies nearly 50% of generic drugs to the United States, one-third to the United Kingdom, and approximately half of Africa’s demand. Any disruption to this supply, ricochets globally, placing millions at risk of losing access to basic treatment.

Currently, as petrochemical supplies tighten, the effects have already rippled across Asia’s manufacturing hubs. Major producers, including the Petrochemical Corp of Singapore, YNCC, and Chandra Asri have been forced to declare Force Majeure, which is a legal status that specifies a company’s inability to fulfill contracts due to extreme events.

Companies in South Korea and Japan have also slashed operating rates, by advancing maintenance schedules just to stay offline until supply stabilizes.

For now, many of these firms find themselves relying on stockpiles designed to last up to two months. However, sustained demand has made it increasingly difficult to preserve these reserves.

Priorities have shifted from fulfilling all orders to rationing the remaining stocks by focusing on life saving medications such as insulin and oncology drugs. Additionally, the production of packaging for non-critical generics has been delayed for the time being.

The Gulf is actively making efforts to reroute exports through pipelines and alternative ports, but such efforts are not remotely close to the full capacity of what the region’s exports were before the war.

Nonetheless, without adequate packaging, even completed medicines risk going to waste as they exceed their shelf life. Thus, what would begin as a logistical bottleneck could quickly escalate into widespread medicine shortages.

From price hikes and rationing to critical hospital shortages, global healthcare is now approaching a tipping point. The risk of rising infection rates due to medicine scarcity is no longer a probability, but could soon become reality, a direct consequence of redundant military conflict.

The current state of global affairs highlights a critical systemic risk, which is the deep interdependence of our modern world.

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