Telangana’s pharma giants prepare for massive hit amid West Asia crisis

Telangana's pharmaceutical industry — the second largest contributor to India's drug exports after Gujarat — is bracing for significant disruption as the West Asia conflict sends shockwaves through global supply chains.

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The state exported $5.9 billion worth of medicines in 2024-25, accounting for 18.3 per cent of India's total pharmaceutical exports of $30.5 billion. Major companies headquartered in or operating out of Telangana — Sun Pharma, Dr Reddy's, Lupin, Torrent, Divis Labs, and Taj Pharma — are among those most exposed to the fallout, industry sources said.

Raw material prices already soaring

The pressure is being felt on the ground. Nikhil Thota, partner at Shodhana Laboratories, said raw material prices have already risen by 10 per cent, with another 10 per cent increase expected shortly.

“The prices of solvents used in medicine manufacturing have gone up. We supply primarily to companies such as Dr Reddy's, Aurobindo, and Mylan, with 60 per cent of our business domestic. We also export to China, Brazil, Korea, and Japan,” he told The Federal.

“Whether we can pass these rising costs on to our buyers remains to be seen. Depending on market conditions, we may have to absorb up to five per cent ourselves,” Thota added.

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The Bulk Drugs Manufacturing Association confirmed that the state primarily exports raw materials and that inter-company adjustments will be necessary to manage the price increases.

Shipping disruptions add to woes

Disruptions to the Strait of Hormuz have doubled shipping costs, with surcharges rising by $4,000–$8,000 per vessel. The Red Sea and other Gulf corridors are also operating far below normal, causing serious delays. The impact is particularly acute for temperature-sensitive medicines that require uninterrupted cold-chain logistics.

Rising crude oil prices are simultaneously pushing up the cost of transporting active pharmaceutical ingredients (APIs) and finished medicines, squeezing company margins from multiple directions.

Pharmexcil (Pharmaceuticals Export Promotion Council of India), an export promotion council for the pharmaceutical industry promoted by the Ministry of Commerce & Industry, estimates the sector could absorb losses of Rs 2,500–5,000 crore in March alone.

Approximately 5.58 per cent of India’s total pharma exports are destined for Gulf countries.

India's growing drug exports to Gulf

Exports to the West Asia and North Africa region grew steadily over the last few years— from $1.32 billion in 2020-21 to $1.75 billion in 2024-25 — with the UAE, Saudi Arabia, Oman, Kuwait, and Yemen among the most reliant on India's competitively priced medicines.

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Exports to Israel also surged, rising 40 per cent to $92 million in 2022-23, growing at roughly 22 per cent annually over the past five years.

Not everyone is sounding the alarm, however. According to a top source in Pharmexcil, the overall impact on pharma exports may not be as severe as feared. Taj Pharma CEO Abhishek Singh echoed a degree of optimism, suggesting that some companies will be able to pivot and find alternative buyers in the US and European markets.

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For now, the industry is watching and recalibrating — hoping the conflict is shortlived, but quietly preparing for a prolonged disruption.

(The article was originally published in The Federal Telangana.)