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Middle East crisis escalation may hurt pharma exports

Apr 20,2024

New Delhi: The conflict in the Middle East could dent India’s pharma exports if it escalates, industry experts say.

While exports have not been affected so far, the next few days are crucial because, if there is serious escalation in the conflict, it could impact the whole Middle East and North Africa (MENA) region. Many Indian pharma companies have a significant presence in the region.

“Companies like Sun Pharma, Dr Reddy’s, Lupin, Torrent, and Divi’s Labs are likely to suffer the most due to their significant presence in the MENA region,” said Dinesh Dua, a former chairman of the Pharmaceutical Export Promotion Council (Pharmexcil). “In fact, Sun Pharmaceutical has a fully-owned subsidiary, Taro Pharmaceutical, based out of Israel which can have supply chain issues.

India supplies bulk drugs and intermediaries, drug formulations and biologicals to countries in the MENA region and over the years there has been a surge of Indian pharma imports there.

The UAE, Qatar, Saudi Arabia, Egypt and Bahrain are major destinations for Indian pharma products . “The imports by these countries amount to a billion dollars per year,” Dua said.

In the first 11 months of the last fiscal year starting April 1, 2023, India’s pharma trade with the MENA region.

“The region is dependent on India for a wide range of products like anti-infectives, injectables and therapies which India supplies in bulk. As of now no major news of disruptions has come but coming days are crucial,” an expert said.

Another industry expert said the operations and supply chain issues in these countries may get affected if the tension escalates and continues.

While pharma companies in the region tend to maintain buffer stocks, with many having stock at least for the next few days, any blockage of air and sea trade routes could deplete the stocks, resulting in shortages of essential drugs, experts say.

“Iran’s unprecedented attack on Israel can have a spill-over effect on the pharma sector. We are keeping a vigil on the situation as there is fear of disruptions, as several airlines are changing routes and many shipping companies have stopped their operations due to the volatile situation. The delivery time will rise due to these issues and can disrupt the supply chain,” added another expert.

The situation in the Middle East is tense as the Israeli military has pledged response to Iran’s attack.

Since the war in Gaza began in October, clashes have erupted between Israel and Iran-aligned groups in places like Lebanon, Syria, Yemen and Iraq.

Source: Pharma

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