Shipping disruptions, geopolitical tensions, and manufacturing bottlenecks are increasing risks across global medicine supply chains.
Dubai: Global pharmaceutical supply chains are coming under increasing strain due to geopolitical tensions, shipping disruptions, and manufacturing bottlenecks, according to a new Moody’s report, raising concerns about medicine availability and rising costs worldwide.
The report warned that pharmaceutical supply chains have entered a “period of sustained instability,” as multiple disruptions increasingly overlap across trade routes, production facilities, and sourcing networks.
For the UAE, which depends heavily on imported medicines and active pharmaceutical ingredients (APIs), prolonged disruption in global logistics and manufacturing hubs could impact delivery timelines, increase procurement costs, and complicate inventory management for hospitals and pharmacies.
Disruption fallout
Moody’s highlighted disruptions along Red Sea shipping routes as one of the most significant recent shocks to pharmaceutical logistics.
According to the report, attacks on commercial vessels during the 2023–2024 Red Sea crisis led six of the world’s 10 largest container carriers to reduce or suspend transit through the corridor, resulting in Suez Canal traffic falling by around two-thirds.
Ships were rerouted around the Cape of Good Hope, adding nearly two weeks and roughly 4,000 miles to transit times. Moody’s noted that the impact was quickly felt by Indian pharmaceutical exporters, especially generic drug manufacturers supplying Europe and other global markets.
“Shipping costs more than doubled, lead times stretched, and the just-in-time model that underpins much of generic drug production left little room to absorb delays,” the report stated.
It added that these disruptions exposed the pharmaceutical industry’s heavy reliance on vulnerable maritime trade routes and highly concentrated sourcing networks.
The UAE’s position as a regional logistics and healthcare hub means disruptions across the Red Sea and Suez shipping corridors can directly impact medicine imports moving between Asia, Europe, and the Gulf.
Dependence vulnerability
The report highlighted the pharmaceutical industry’s heavy reliance on India and China for active pharmaceutical ingredients (APIs) and raw materials. Moody’s said years of cost-driven consolidation have concentrated API production in these two countries, creating structural vulnerabilities across global supply chains.
It added that “the ongoing conflict with Iran is rapidly creating shockwaves throughout the pharmaceutical supply network as the supply of Indian-sourced APIs is severely restricted.”
According to the report, the United States imports nearly 40% of its generic medicines using APIs sourced from India, while India itself remains heavily dependent on China for bulk drug inputs.
“India, which sources around 70% of its bulk drug imports from China, was particularly exposed,” Moody’s said.
The report added that for UAE healthcare providers and pharmaceutical distributors, such an interconnected supply chain increases exposure to disruptions originating far beyond the region.
Tensions to hit costs?
The report also warned that escalating trade tensions and proposed tariffs could significantly drive up pharmaceutical costs worldwide.
Moody’s cited a proposed 25% US tariff on pharmaceutical imports, which could add nearly $51 billion in annual drug costs and lead to higher prices for consumers.
Manufacturers reported double-digit cost increases for medicines such as amoxicillin, acetaminophen, and metformin, while freight costs also surged during the disruption period.
The report noted that shipping rates from China to the US West Coast rose from $3,500 to $6,500 per container. Although the tariff measures cited are US-focused, Moody’s warned that pharmaceutical supply chains are highly interconnected, meaning both pricing pressures and supply shocks can spread globally.
“The long-term takeaway is clear,” Moody’s said. “Pharmaceutical supply chains may benefit from shifting from a model optimized for cost to one built for resilience.”
Manufacturing strain
Moody’s also highlighted limited flexibility within global pharmaceutical manufacturing networks. The report said many sterile injectable and high-volume generic drug facilities already operate above 80% capacity, leaving little spare room to manage disruptions.
It added that qualifying an alternative production site can take between 12 and 24 months, meaning supply shortages can persist for long periods when facilities face shutdowns, regulatory action, or financial distress.
The report pointed to the 2023 collapse of Akorn Pharmaceuticals as an example of how rapidly supply disruptions can spread through the healthcare sector.
“FDA rules required the immediate recall of its entire product portfolio, eliminating supply across multiple therapeutic categories with no advance warning,” the report stated.
The report added that no manufacturer had sufficient capacity or regulatory approval to quickly replace the lost production volumes.
Import-reliant markets
The Moody’s report highlights the growing challenges facing import-dependent healthcare systems, including the UAE, where medicines, active pharmaceutical ingredients (APIs), and medical products rely heavily on global supply chains.
It warned that any prolonged disruption to shipping routes, manufacturing hubs, or raw material sourcing networks could raise procurement costs and lengthen delivery timelines for distributors and healthcare providers across the region.
The report also noted that pharmaceutical companies are increasingly being forced to reassess supply chain strategies that have traditionally prioritised efficiency and cost reduction.
“Companies that view disruptions as isolated incidents may remain exposed,” Moody’s said.
The report added that supplier diversification, alternative logistics routes, and regionalized production are becoming increasingly important as the pharmaceutical sector adapts to a more volatile operating environment.
