Middle East Conflict: Assessing the Impact of the Iran War on Nepal’s Pharmaceutical Market
Image source, Getty Images
The ongoing conflict in the Middle East has disrupted supply chains, raising concerns among Nepalese pharmaceutical businesses about potential impacts on domestic production and imports. A government official confirmed plans to assess these effects and develop appropriate strategies.
According to the Drug Administration Department’s website, Nepal hosts around 130 pharmaceutical companies, with over 80 currently operational, as reported by the Nepal Pharmaceutical Entrepreneurs Association.
The association’s president warned that disruptions in petroleum supplies have caused shortages of raw materials critical for medicine manufacturing, potentially leading to serious problems if the war persists.
The Director-General of the Drug Administration Department noted that by-products from petroleum refining are essential for pharmaceutical production; global supply issues would inevitably affect Nepal as well.
Reports of shortages of raw materials needed for saline solutions have already emerged, prompting plans for a comprehensive impact analysis.
A founder of a leading Nepalese pharmaceutical company highlighted the need to end cumbersome regulations and implement more industry-friendly government policies.
What Are Pharmaceutical Manufacturers Saying?
Image source, PA Media
Hari Bhakta Sharma, founder and executive director of Deurali-Janta Pharmaceuticals, which has been manufacturing medicines in Nepal since 1991, said raw material prices have surged and urged the government to formulate supportive policies for the industry.
He states, “Most suppliers have stopped accepting orders. Without raw materials, producing medicines is difficult. We are currently working with available stock to prevent shortages for consumers.”
“However, if materials do not arrive and prices rise significantly, the industry won’t be able to import them. Our market is small, limiting international transaction opportunities. Therefore, policy reform is necessary.”
He also explained that manufacturers have been forced to sell medicines at fixed prices for nearly two decades, and that the new government should update these policies.
Prakash Khandelwal, president of Nepal Pharmaceutical Entrepreneurs Association, emphasized that medicine production is impossible without petroleum by-products, which are already facing shortages.
He said, “Most of our medicines are imported from India, where problems have also begun. The situation depends on how long the war lasts and its further developments.”
“Nepal largely depends on India for raw materials; shortages there would cause shortages here as well. A prolonged crisis would present significant difficulties for us.”
A recent report from the online edition of India’s The Times of India stated that due to a severe propane gas shortage, essential for reactor and vapor exhaust equipment operations, many pharmaceutical companies in Gujarat, Maharashtra, Telangana, and Andhra Pradesh have partially or fully shut down.
Production of various medicines, ranging from paracetamol to vitamins and hormones, has been affected, raising concerns about impacts on antibiotic production as well.
What Is the Regulatory Body Doing?
Image source, PA Medicine
Narayan Dhakal, Director-General of the Drug Administration Department, acknowledged that global supply disruptions will impact Nepal. He is initiating discussions with stakeholders to address these issues.
Dhakal stated, “It is inevitable that this will cause some impact soon. Increased transportation costs and raw material shortages will create pressure. I am in communication with manufacturers. Although no official reports have been submitted, suggestions have arrived to review VAT policies.”
He also mentioned potential issues with raw materials for saline production and efforts to evaluate the crisis’s effects.
“I have requested objective impact details from producers. We should know more within a few days.”
“Industries maintain some stock of raw materials, with some holding enough for two to four months. If problems in India persist, we will face challenges. However, a discussion with business stakeholders is necessary to assess the full impact.”
What Do Business Leaders Recommend?
Image source, Getty Images
Prakash Khandelwal of the Nepal Pharmaceutical Entrepreneurs Association advised the government to pursue diplomatic initiatives to secure raw material supplies from India and China.
He noted, “Our neighboring countries have large populations with high demand, but our demand is relatively small. Hence, the government must actively ensure supply lines for Nepal.”
Amid challenges with fuel and supply systems emerging as the National Independent Party prepares to lead the government following the third week of the Falgun parliamentary elections, concerns are rising.
The closure of the Strait of Hormuz, an international waterway within Iran’s sphere of influence, raises the potential for disruptions in medicine supply chains reaching the United States and beyond.
Founder Sharma pointed out that Nepal’s pharmaceutical sector is burdened with unnecessary regulations, warning that the current supply crisis could force industry shutdowns.
He emphasized, “Global price indexes determine pricing, and inflation impacts this as well. However, the Nepal government has enforced laws compelling manufacturers to sell medicines at fixed prices between one and five rupees, even though a cup of tea costs 25 to 30 rupees.”
“Focusing on price over quality has caused significant problems. Industries are gradually deregistering, and importing medicines will become difficult. Immediate policy reforms are necessary.”