With conflict in the Middle East bringing on a global energy market squeeze, one major pharma supplier is raising prices across its excipients and active pharmaceutical ingredient (API) portfolio.
Global chemical production company BASF Pharma Solutions is increasing its prices by up to 20% for its excipients and a select array of its APIs, the company announced in a Monday press release. The price change will take effect immediately or as BASF’s existing contracts allow.
“The adjustment supports BASF’s commitment to maintaining a reliable supply of high-quality products across its portfolio amid rising global energy and raw material costs,” the company said.
BASF will continue to monitor market conditions and may make future adjustments as needed, it noted. Excipients are inactive ingredients that play a crucial role in drug formulations along with APIs.
A month into the U.S. and Israel’s war with Iran, rising energy costs have touched many industries. Much of the supply concerns revolve around the effective closure of the Strait of Hormuz, a key passageway that is responsible for the flow of about 20% of the world’s crude oil and natural gas. Oil prices have risen sharply since the initial attack on Iran in late February.
Rising oil prices could affect the supply chain of “most global manufacturers,” Aaron Lober, manufacturing intelligence lead at AI production platform developer CADDi, told Fierce Pharma in a statement earlier this month.
While “very few” manufactured goods pass through the Strait of Hormuz, Lober said, the bigger issue becomes “how rising oil prices ripple through transportation and energy costs across the entire system.”
Several large global pharmas have said that they are keeping an eye on their employees and medicine supply amid the evolving conflict. Executives at some Western drugmakers, speaking anonymously, previously told Reuters that they are looking at alternative routes into the Gulf and trucking some drugs over land rather than using sea lanes.
While the Middle East is only responsible for 0.3% of the world’s API production, a few select drugs stand to be particularly affected, according to a recent report from The Hill. For example, Jordan produces about half of the global supply of amoxicillin oral suspension and about half of the world’s API for fast-acting anesthetic etomidate. Further, 73% of API for benzodiazepine antagonist flumazenil is made between Jordan and Israel, according to the report.
If the situation continues, Gerren McHam, VP of external affairs at the API Innovation Center, warned The Hill that supply chain lead times, transportation costs and key starting materials could be affected.
In England, the head of the National Health Service (NHS), Sir Jim Mackey, is “really worried” about medical supplies and shortages, telling LBC radio show host Nick Ferrari that “everything’s at risk.”
The U.S., however, shouldn’t see shortages for generic medicines for at least a few more weeks, given available buffer stocks, Rohit Tripathi, vice president of industry strategy for manufacturing at RELEX Solutions, told CNBC on March 16. Nearly half of generic prescriptions sold in the U.S. come from India, which in turn depends on the Strait of Hormuz for about 40% of its crude oil imports.