Middle East Tensions: Impact of Iran Conflict on Nepal’s Pharmaceutical Market
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Business stakeholders in Nepal are monitoring potential impacts on local pharmaceutical production and imports due to supply chain disruptions caused by the ongoing conflict in the Middle East, with officials assuring suitable strategies will be implemented accordingly.
According to the Department of Drug Administration’s website, Nepal hosts approximately 130 pharmaceutical industries, of which over 80 are currently operational, as reported by the Nepal Pharmaceutical Entrepreneurs Association.
The association’s president warned that alongside disruptions in petroleum supply, shortages of essential raw materials for medicine production have already begun to manifest, with continued conflict potentially exacerbating the situation significantly.
The Department of Drug Administration’s director general highlighted that several co-products derived from petroleum processing are used in pharmaceuticals, suggesting global supply issues may also affect Nepal.
He mentioned that the shortage of raw materials necessary for saline solution production is already being reported and that a comprehensive assessment of potential impacts will be undertaken.
The founder of one of Nepal’s leading pharmaceutical companies urged the government to eliminate complex procedures and adopt more industry-friendly policies.
What Are Pharmaceutical Producers Saying?
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Haribakta Sharma, founder and executive director of Deurali Janata Pharmaceutical Pvt. Ltd., which has been producing medicines since 1991, stated the government must adopt supportive policies to aid manufacturers facing rising raw material costs.
He said, “Many suppliers have already stopped taking orders from us. If raw materials become unavailable, producing medicines in the future will become very difficult. We are currently working with existing raw materials to minimize supply disruptions.”
“However, if imports are halted and prices escalate significantly, industries will be unable to procure necessary materials. Given Nepal’s small market size, global contracting capabilities are limited, hence policy reforms are essential.”
He added that the government has mandated selling medicines at a fixed price for nearly two decades, and the new administration should consider revising this policy.
Prakash Khandelwal, president of the Nepal Pharmaceutical Entrepreneurs Association, emphasized that producing medicines without vital petroleum by-products is impossible and shortages of these materials have already begun.
He stated, “Our primary source of raw materials is India, where problems are also mounting. The duration of this war and its effects on us remain uncertain.”
Khandelwal added, “Since most raw materials come from India, any shortage there will reflect here. If this situation persists, the challenges for us will grow.”
According to a recent report in The Times of India, shortages of propane gas—essential for reactor and vapor emissions—have forced many pharmaceutical companies in Gujarat, Maharashtra, Telangana, and Andhra Pradesh to partly or fully shut down operations.
This has affected the production of medicines such as paracetamol, vitamins, hormones, and certain antibiotics.
What Is the Role of the Regulatory Authority?
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Narayan Dhakal, director general of the Department of Drug Administration, acknowledged that Nepal may experience effects due to the global supply disruptions and has initiated discussions with stakeholders.
“The impact is inevitable and will manifest soon. Transportation costs will rise and raw material supply will be affected, increasing pressure. I am in talks with producers and believe VAT on some items should be reviewed,” he noted.
Following reports of potential shortages in raw materials for saline solution, Dhakal said efforts are underway to evaluate possible consequences of this crisis.
“I have instructed producers to provide detailed, objective information on these effects; within one to two days we will have a clearer picture,” he added.
“Industries typically stock raw materials for two to four months. However, with increasing disruptions in India, we must monitor the coming period closely. Discussions with business stakeholders will clarify the full impact.”
What Suggestions Are Business Leaders Offering?
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Prakash Khandelwal, president of Nepal Pharmaceutical Entrepreneurs Association, stressed the need for the government to pursue diplomatic efforts to ensure uninterrupted supplies of raw materials from India and China.
He informally shared these concerns with the Ministry of Health, adding, “Our neighboring nations have large populations with significant medicine demands. Given Nepal’s small market, proactive steps must be taken immediately.”
Amid preparations for a National Independent Party-led government following elections in the third week of the Nepali month of Falgun, challenges related to fuel and supply systems have begun to surface.
With the closure of the Strait of Hormuz, a key international maritime route in Iran’s sphere of influence, reports have emerged indicating potential disruptions to pharmaceutical supply chains reaching the United States.
Founder Haribakta Sharma pointed out that Nepal’s pharmaceutical industry is heavily burdened by excessive regulations and control, warning that current supply chain challenges could force industries to shut down.
He emphasized, “Worldwide, consumer price indexes determine pricing, and inflation also influences costs. Yet, our government enforces a fixed price for medicines by official gazette notification, even though a cup of tea costs between 25 to 30 rupees.”
“The focus on price without considering quality poses a significant problem in Nepal. Without reforms, industries will shut and importing medicines will become impossible. Immediate revision of outdated policies is critical,” he concluded.
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