Compared to the days of the coronavirus pandemic a few years ago, customer activity in any pharmacy in the U.S. state of Virginia appears normal. Shelves are well stocked with medications, many of them marked with discounted prices. Yet despite this calm scene, there is growing anticipation of a major crisis in what are known as global supply chains—one that could turn this quiet picture upside down.
The pharmaceutical industry in the United States is closely tied to political and military developments in distant locations, one of which is the Strait of Hormuz.
This narrow maritime passage between Iran and Oman is considered one of the world’s most critical arteries of global trade, through which roughly one-fifth of global oil exports pass. While its connection to energy markets is well known, its potential impact on the pharmaceutical sector is less obvious—but could be profound.
Experts in health policy and pharmaceutical supply chains warn that any prolonged disruption to shipping or any significant increase in energy prices could gradually ripple into the U.S. pharmaceutical sector through a series of complex economic and industrial interactions.
Over the past three decades, the pharmaceutical industry has gradually shifted toward a global model that relies on outsourcing production. Dr. Mariana Socal, a researcher at Johns Hopkins University specializing in pharmaceutical economics and global supply chains, says the United States depends heavily on external companies for drug manufacturing.
In an interview with Alhurra, she explains that the United States already relies on international manufacturers to supply medications. She adds: “New, high-cost drugs are often produced in Europe, while a large share of cheaper generic drugs comes from China and India.”
Generic drugs—lower-cost versions of medications after patents expire—form the backbone of the U.S. healthcare system, accounting for more than 90 percent of prescriptions dispensed in the United States. However, their production depends on a multi-stage international manufacturing chain.
Socal explains that drug manufacturing does not occur in a single facility, but rather passes through multiple stages, including raw chemical materials, active pharmaceutical ingredients, final manufacturing, packaging, and transportation.
She adds: “Some parts of this chain rely on maritime shipping routes, and some of these routes pass through areas connected to the Gulf and the Strait of Hormuz.”
The relationship between the Strait of Hormuz and pharmaceuticals is not limited to maritime transport. Many of the core materials used in drug manufacturing are directly linked to the oil industry.
Dr. Mark Kahn, dean of the Kirk Kerkorian School of Medicine and a professor and researcher in pharmaceutical manufacturing at the University of Nevada, Las Vegas, explains that many basic chemical components of medicines are derived from petroleum products.
In an interview with Alhurra’s website, he says that many primary ingredients for drugs come from the oil industry, such as glycerin compounds and phenols. If oil production or shipping is disrupted, shortages of these materials will follow. “This connection means that rising oil prices or disruptions in oil supply can increase the cost of drug manufacturing.”
Countries that produce a large share of generic drugs, such as India, also depend on global shipping routes to transport their products to international markets. Kahn adds that “India produces a significant portion of the world’s generic drugs and relies on international shipping routes—including those linked to the Strait of Hormuz—to export them.” If supply chains are disrupted or transportation and energy costs rise, these costs may gradually be passed on to consumers.
Socal explains that the problem is more acute for generic drugs because their manufacturers operate on extremely thin profit margins. “Generic drug producers operate with very low profit margins, so they cannot absorb cost increases. Any rise in production or transportation costs is usually passed directly along the supply chain.”
In other words, if energy or shipping costs rise, manufacturers may increase prices, distributors may follow suit, and the increases ultimately reach pharmacies and consumers.
Kahn explains that this economic relationship is clear: “If there is a disruption in supply, prices will undoubtedly rise.” However, the risk is not limited to higher prices alone. Some medications could face shortages in the market if supply chains are disrupted for an extended period.
Socal points out that one vulnerability in the global pharmaceutical system is that certain drug components are produced in a very limited number of facilities. She notes that in some cases, around one-third of the active ingredients for generic drugs are manufactured in a single facility worldwide—meaning “any disruption in production or transport can quickly affect availability.”
She adds that companies typically maintain reserve stockpiles “sufficient for only 30 to 60 days.” If the crisis persists beyond that, “real drug shortages could begin to appear.”
The United States has already experienced a similar situation during the coronavirus pandemic, when lockdowns and export restrictions in some countries caused disruptions in medical supply chains. Socal believes the pandemic exposed the extent of U.S. reliance on foreign production.
At one point, India imposed temporary restrictions on exporting certain medications to secure its domestic needs. This experience prompted Washington to rethink the security of its medical supply chains.
In recent years, discussions in the United States have begun about reshoring part of the pharmaceutical industry. Among the proposals discussed in Washington are incentives for hospitals to purchase drugs manufactured within the United States.
The Food and Drug Administration (FDA) is also working to accelerate approvals for U.S. facilities that aim to produce pharmaceutical ingredients. However, Socal warns that fully bringing manufacturing back to the United States is not a simple solution. “The pharmaceutical industry has become highly globalized, and some technologies and expertise exist outside the United States.”
So far, there have been no widespread indications of rising drug prices due to the war with Iran, but experts say the real risk depends on the duration of the crisis.
If disruptions remain limited and short-term, companies may be able to adapt through alternative shipping routes or existing stockpiles. But if the crisis persists for a longer period, it could become a real test for the global pharmaceutical supply system.
In a world increasingly dependent on international trade, the distance between a maritime strait in the Gulf and a pharmacy shelf in the United States may be shorter than it appears.
The article is a translation of the original Arabic.
Randa Jebai
Randa Jebai is an award-winning journalist with more than 20 years of experience. She joined Alhurra TV’s investigative team in 2020, earning honors from the AIBs, New York Festivals, and the Telly Awards. She previously worked with major Lebanese outlets and holds master’s degrees in law and journalism.
