India’s pharma sector is steadily strengthening its presence on the global stage. In 2024-25, India’s pharma exports reached $30.47 billion, registering a growth of 9.4%. The industry expects to achieve double-digit growth by 2026-27, with high-value products such as complex generics, injectables, biosimilars, and contract manufacturing playing a crucial role. However, if the conflict in the Middle East spreads further, these exports could face significant disruption.
Let us understand the potential impact of the Middle East conflict on India’s pharma exports and what this situation could mean for investors.
What’s Happening?
The rising tensions between Iran and Israel have created a serious economic and logistical challenge for the Indian pharma sector. According to The Economic Times, industry experts believe that if this conflict continues until March, India’s pharma exports could face losses of $300 to $500 million (approximately Rs 2,500 to over Rs 4,500 crore). One of the biggest impacts of this crisis has been the sharp rise in freight costs. The cost of containers carrying bulk drugs from China has doubled from $1,200 to $2,400. In addition, shipping companies are becoming hesitant to carry cargo to Gulf country ports or are charging heavy surcharges ranging from $3,500 to $5,000.
This situation is particularly concerning for India because the Middle East and GCC countries account for about 5-6% of India’s pharma exports and also serve as a key transit point for shipments to the US and Western countries. Disruptions in the supply chain are therefore putting both India’s reputation for timely drug delivery in the global market and its profitability under pressure.
Logistics Challenges and Rising Freight Costs
Growing challenges in the global freight market are directly affecting Indian pharma exports. In recent months, freight charges for both imports and exports have nearly doubled, while additional surcharges ranging from $4,000 to $8,000 are being imposed on several shipments. The freight cost of bulk drugs coming from China has also increased from $1,200 to around $2,400 per container, raising overall supply chain costs for companies.
At the same time, some shipping lines are refusing to carry cargo to Gulf hubs or are charging additional fees. Due to rising tensions in the Middle East, uncertainty continues around key maritime routes such as the Red Sea, the Strait of Hormuz, and major Gulf shipping corridors. This increases the likelihood of shipment delays or the need to reroute cargo.
Alternative air routes are also being affected due to the closure of airspace in certain parts of the Middle East. This situation is particularly challenging for temperature-sensitive pharmaceutical products, as delays in transport can affect both their quality and delivery timelines.
Growing Role of Indian Pharma Exports in the WANA Region
The West Asia and North Africa (WANA) region is emerging as an important market for Indian pharmaceutical exports. Currently, GCC countries account for about 5.58% of India’s total pharma exports. According to available data, India’s pharma exports to the WANA region have increased from $1,320.44 million in FY2020-21 to $1,749.68 million in FY2024-25. This growth reflects the strong demand for Indian generic medicines and affordable treatment options across the region.
Major markets such as the United Arab Emirates (UAE), Saudi Arabia, Oman, Kuwait, and Yemen depend heavily on India for affordable medicines and generic formulations. At the same time, data from Pharmexcil indicates that demand for Indian pharma products is also rising rapidly in emerging markets such as Jordan, Kuwait, and Libya. In addition, export opportunities in categories such as vaccines, surgical products, and AYUSH formulations are steadily expanding.
What Does This Mean for Investors?
This situation presents mixed signals for investors. In the short term, if the conflict escalates further, there could be pressure on the shares of pharma companies, as export losses of up to $300–500 million are possible, particularly if disruptions continue through March. However, many companies are attempting to maintain supply chain stability by managing inventory levels.
In the long term, efforts are underway to position India as a global pharma export hub. If the industry successfully navigates these challenges through route diversification and policy support, growth prospects could remain strong.
What’s Next?
Rising tensions between Iran and Israel have increased logistics and supply chain challenges for the Indian pharma sector in the short term. Given the risks in the Middle East, measures such as route diversification, alternative logistics arrangements, and freight relief will become essential to ensure that export activities continue smoothly.
However, the long-term outlook for the Indian pharma industry remains positive. The global pharma industry is currently valued at around $1.6 trillion, while India’s market stands at approximately $55 billion. It is estimated that by 2030, the Indian pharma market could reach $120–$130 billion, with the country’s global share increasing from the current 3-3.5% to nearly 5%.
A notable feature of the Indian pharma industry is that its export market is almost equal in size to its domestic market. Currently, pharma exports account for about 6% of India’s total merchandise exports, highlighting the growing importance of this sector in the country’s economy.
Disclaimer: This article is for educational and informational purposes only and does not constitute investment advice or a recommendation to buy or sell any securities. The companies mentioned are cited as examples within the context of market developments. Investors are advised to conduct their own due diligence and consult their financial advisor before making any investment decisions.
Investments in the securities market are subject to market risks. Read all related documents carefully before investing.
