Pharma exports to GCC & WANA to get affected after US-Israel strikes on Iran

Mumbai: Indian pharmaceutical exports to the Gulf Cooperation Council (GCC) countries and West Asia-North Africa (WANA) region would be badly hit because of the ongoing challenges in the global freight market following the US-Israel strikes on Iran and subsequent retaliation.

Expressing concern over the situation, the Pharmaceuticals Export Promotion Council of India (Pharmexcil) said it it is closely monitoring the situation and are actively engaging with stakeholders in the logistics and trade sectors to explore ways to mitigate the impact on pharmaceutical exports, especially in the GCC and WANA regions.

The GCC countries comprise Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates.

The WANA region comprise Bahrain, Kuwait, Oman, Qatar, Iraq, United Arab Emirates, Saudi Arabia, Egypt, Sudan, Algeria, Morocco, Tunisia, Syria, Jordan, Israel, Lebanon, Yemen, Libya and South Sudan.

“Given the significant importance of this market for pharmaceutical products, a complete disruption of March’s exports could result in a potential loss of approximately Rs 2,500 to Rs 5,000 crores for the Indian pharmaceutical industry,” Pharmexcil Chairman Namit Joshi said on Friday.

"Currently, GCC countries account for 5.58 per cent of total Indian exports. Our recent data also show an upward trajectory in the total export value of Indian pharmaceutical exports to the WANA region, increasing from $1,320.44 million in FY 2020-21 to $1,749.68 million in FY 2024-25. Key markets like the UAE, Saudi Arabia, Oman, Kuwait, and Yemen highly depend on India for affordable medicines and generic formulations. Pharmexcil data also indicates significant growth in emerging markets such as Jordan, Kuwait and Libya, as well as product categories like vaccines, surgical products and AYUSH formulations,” said Joshi while dwelling on the situation.

According to him, the doubling of freight charges for both imports and exports, accompanied by surcharges of $4,000 – $8,000 per shipment, has put substantial pressure on Indian pharmaceutical companies.

Tensions in the Gulf region are creating uncertainty in critical maritime and air cargo routes essential for pharmaceutical shipments.

“Key routes like the Red Sea, Strait of Hormuz, and Gulf shipping corridors are facing potential risks of rerouting or delays, which may impact delivery schedules. This is particularly concerning for temperature-sensitive pharmaceutical products that could be adversely affected by these disruptions,” Joshi said.

“A secondary concern is the escalation of costs throughout the pharmaceutical supply chain. The major cost drivers include crude oil price fluctuations, rising logistics costs for APIs and finished formulations and shipping delays that will affect inventory cycles,” he added.

In light of the emerging situation, Pharmexcil urged the Centre for increased collaboration with government authorities to seek possible freight relief measures, such as subsidies or logistical support for pharma exporters, diversification of shipping routes and exploration of alternate logistics options to ensure the stability of pharmaceutical supply chains and continued dialogue with international regulatory bodies.

“Pharmexcil will continue to advocate for solutions that will safeguard the interests of Indian pharmaceutical exporters, ensuring that the GCC and WANA regions remain vital markets for India’s pharmaceutical sector,” added Joshi.