The closure of the Strait of Hormuz and attacks on multiple countries across the region is having a devastating effect on pharmaceutical supply chains. Many pharmaceutical products are time-critical, temperature-sensitive or stringently regulated, or a combination of these, which means that efficient supply chains are a must.

Impact of oil and energy prices

Energy and petrochemical inputs are core components of drug production and packaging, says Dr William Soliman, founder and CEO of the Accreditation Council for Medical Affairs. “When oil prices increase, those costs eventually pressure pharmaceutical margins and supply chains.”

Roughly 20% of global oil shipments move through the Strait of Hormuz. As well as oil tanker blockades, Dr Soliman adds that “many active pharmaceutical ingredients move through global shipping routes tied to Asia and the Middle East”.

The impact of this is much wider than it first seems. According to an April 2026 report by the British Medical Journal, the conflict exposes global healthcare supply chain vulnerabilities because of different products manufactured in the Middle East. “A missile strike in Qatar or Saudi Arabia, for example, can theoretically cause a shortage of intravenous bags in Bangkok and catheters in Brussels, or halt the use of MRI machines in Brisbane,” the report says. 

David Fairnie, Principal Consultant at BSI, says this vulnerability is increased by a heavy reliance on India, where a large share of the world’s generic drugs and active pharmaceutical ingredients are made.

“[India’s] production facilities are very sensitive to energy prices and logistics costs,” Fairnie explains. “Manufacturing becomes more expensive due to energy costs and shipping those products becomes more complicated because air freight capacity tightens and rates go up.”

These pressures affect global markets, so “pharmaceutical companies [have to] shift into inventory management mode, trying to keep supply steady while the logistics environment stabilises,” says Fairnie.

How pharma businesses are responding

According to a white paper from cross-industry organisation Pharma.aero, the financial impact of the conflict “goes far beyond transport costs”. Inventory management, replenishment cycles and cashflow are also affected. 

Pharmaceutical companies are responding by prioritising continuity of supply over cost optimisation, particularly for essential and life‑saving medicines, says Christy Christian, Senior Life Sciences Principal at Kinaxis. “Many are applying lessons learned from COVID‑19, including supplier diversification – although this is a longer-term initiative due to regulatory approval – selective inventory buffers and parallel logistics routes.”

There is a greater emphasis on earlier, more proactive decision‑making, with companies assessing risk scenarios and trade‑offs sooner, instead of reacting once disruption reaches manufacturing or markets, Christian adds.

Financial modelling: focus on possible impacts 

Christian says that advanced planning and scenario-based decision solutions help manage volatility, modelling the impact of rerouting, extended lead times and energy price spikes. This helps avoid the ripple effect of decision latency on supply chains and patient care.

Fairnie cautions that air freight global capacity is down by 18% and costs are up by 400% for Gulf-transitioning routes as Middle East air corridors have been closed or re-routed, so alternative suppliers and routes are essential.  

In his March 2026 white paper, Fairnie says pharma businesses should treat customers as “strategic partners whose decisions about inventory, demand timing and alternative sourcing will materially affect your own supply chain management.”

Prioritise long-term planning

Resilience, forward planning and regulatory compliance should be part of a core business strategy, rather than a cost. Firms with alternative supply chain strategies will be better placed to survive – and even thrive – amid geopolitical challenges.

Industry stakeholders are encouraged by Pharma.Aero to prioritise resilience-centric strategies over short-term cost savings. Companies should secure long-term capacity agreements with logistics partners and utilise digital twin technology – which allows organisations to create a digital replica of an object, system or process – to stress-test simulated disruptions. 

Keep on top of compliance

Fairnie urges taking a proactive approach to compliance: “Supply chain disruption creates regulatory notification obligations [and] those obligations do not pause because you are busy managing a crisis.”

Ensure your regulatory affairs team has a full view of supply issues that meet notification thresholds, and to inform regulators early, Fairnie advises. “Regulators distinguish between organisations that inform them early and those that are informed by a third party that a regulated supply has failed.”

In a long, spreading conflict, the greatest operational risk is the problems you do not see coming until they hit, says Fairnie. “Invest immediately in supply chain intelligence capability: enhanced supplier communication protocols, third-party risk monitoring services, logistics tracking at tier-2 and beyond.”

Invest in tech

Amid uncertainty, innovative firms can benefit from leaning into the disruption, including investment in AI for resilience strategies and regulatory compliance to make it easier to weather storms.

Businesses reluctant to invest in AI solutions because of uncertainty about the return on investment may miss out on efficiencies that help ease the pressure in turbulent times. For example, automating complex supply chain reporting could help identify efficiencies that traditional models miss.