War hits MP’s pharma industry:Exports of 100 firms at zero, drug supply to 190 countries halted; industry nears shutdown

The direct impact of the escalating tension between Iran, Israel, and the US is now visible on Madhya Pradesh’s pharmaceutical industry. Exports from nearly 100 pharma companies in the state have completely halted. Due to the threat of war on sea routes such as the Red Sea and the Strait of Hormuz, shipping companies have pulled out, disrupting the supply of medicines to 190 countries. 3 main reasons for export halt Shortage of vessels: Given the risk of war, companies have refused to deploy their ships at sea. This has completely stopped bookings. Huge increase in freight charges: Container rental has increased by up to 40%. For example, the rate for a 40-foot container going to Africa has risen from 3.5 lakh to 4.5 lakh. Expensive insurance: Fearing maritime attacks, insurance companies are avoiding providing insurance. Where insurance is available, the premium is so high that logistic costs have exceeded production costs. Industry in crisis: 3-shift work reduced to one According to Dr. Anil Sabarwal, Secretary of the Indian Drugs Manufacturing Association (MP), companies are under heavy pressure due to their inability to dispatch ready stock. Cut in production: Companies that used to operate 24 hours (3 shifts) are now working only in 1 shift. In the coming time, there is a possibility of working only 5 days a week. Increase in cost: Packing material prices have increased by 20%, and PVC prices by up to 30%. Due to the unavailability of raw materials, the industry is moving towards a shutdown. Export commitments and losses Dr. Gautam Kothari, President of Pithampur Industrial Organization, stated that companies have orders, but they are unable to ship goods at the old agreed rates. Due to the 2 to 4 times increase in transport costs, exports are incurring heavy losses. The situation of chemical and steel companies in Pithampur SEZ is similar. Impact on Global Market Countries like the UAE, Saudi Arabia, and Oman depend on Indian medicines for their affordable healthcare services. Due to the just-in-time inventory system, companies do not have much stock. If the war continues for another 10-15 days, there could be a severe shortage of essential medicines in the international market. Raw material inflow also halted Around 5600 industries near Indore (Pithampur, Sanwer Road, Palda) are 60% dependent on the Middle East for raw materials. Imports affected: The supply of bulk drugs and petrochemicals coming from Bahrain, Qatar, and Saudi Arabia has stopped. China factor: The freight cost of containers coming from China has increased from ₹1.5 lakh to 3 lakh, due to which the inflow from there has also become negligible. About 80 thousand containers were sent every month from Madhya Pradesh to Kandla and JNPT (Jawaharlal Nehru Port Trust) ports, but their movement has now almost stopped. Due to the limited capacity of air cargo, it is also not proving to be an alternative.