The Rerouting of Europe‘s medicine cabinet: How the Iran war is reshaping pharmaceutical supply chains

By Pharmaceutical Daily Editorial Staff

As the conflict in the Middle East enters its second month, the pharmaceutical industry across Europe is confronting a reality that industry executives and policymakers have long feared but done little to prevent: the exposure of deeply embedded vulnerabilities in the continent’s medicine supply chains. While no acute drug shortages have yet materialized on European pharmacy shelves, the war between the US, Israel and Iran has triggered logistical disruptions, cost escalations and strategic recalibrations that could fundamentally alter how medicines reach patients across the continent.

The crisis, which began with US and Israeli strikes on Iran on 28 February, has since engulfed critical air and sea routes that serve as the arteries of global pharmaceutical trade. For Europe’s pharmaceutical sector—already reeling from pandemic-era disruptions, trade tensions, and a growing dependency on Asian active pharmaceutical ingredient (API) suppliers—the war represents not merely a temporary shock, but a stress test of unprecedented magnitude.

The Logistics Crisis: When Routes Close

The most immediate impact has been felt in the realm of logistics. Iran’s retaliatory closure of the Strait of Hormuz and subsequent strikes on Gulf air hubs have forced pharmaceutical companies to abandon their most efficient shipping corridors. Major airports including Dubai, Abu Dhabi, and Doha—critical cargo hubs that link Europe with Asia and Africa—have been closed or severely restricted. Dubai and Doha, in particular, have long handled substantial volumes of temperature-controlled pharmaceutical shipments through carriers such as Emirates and Etihad, alongside logistics firms including DHL.

Industry data cited by Wouter Dewulf, a professor at Antwerp Management School, shows that more than a fifth of global air cargo—the primary route for critical and life-saving drugs and vaccines—has been exposed to the disruption. Pharmaceutical executives are now rerouting shipments through alternative airports including Jeddah and Riyadh in Saudi Arabia, as well as Istanbul and Oman. Europe-to-Asia cargo that typically transited through Dubai or Doha is being redirected through China or Singapore.

“Alternative cold-chain corridors cannot be set up overnight,” one executive cautioned, adding that temperature-controlled shipments risk missing connections unless proper storage and handling are secured at each point along rerouted paths. The added transit times and increased reliance on dry ice to maintain cold-chain integrity are driving up costs across the board.

The medicines most at risk are those requiring strict refrigeration and those with short shelf lives. Prashant Yadav, senior fellow for global health at the Council on Foreign Relations, identified cancer drugs, particularly monoclonal antibodies, as among the highest-risk products. Typical stock levels for such medicines in the Gulf run around three months, but some customers have already warned suppliers they could run low within four to six weeks if conditions do not improve.

The disruption extends beyond finished medicines. Industry executives have flagged potential shortages of packaging components including vial stoppers and IV bag plastics—components that are themselves shipped through affected routes. “It’s not always a shortage of the medicine itself,” said David Weeks of Moody’s. “In some cases, it’s the little stopper on the vial where the dosage is extracted.”

In Germany, DHL’s health logistics campus near Frankfurt—an area equivalent to 14 football fields—has become a frontline facility in the effort to maintain supply continuity. Katrin Hoelter, head of logistics for DHL Germany and the Alpine region, told AFP that customers are requesting increased storage volumes to ensure availability of raw materials for production.

Germany’s Warning: The Longer It Drags, The Greater The Risk

Germany’s pharmaceutical industry issued one of the starkest warnings to date. Dorothee Brakmann, CEO of Pharma Deutschland, told the daily BILD that the war is already affecting the country’s pharmaceutical industry, with many medications and packaging relying on raw materials from the region. A helium shortage, she noted, could delay production, while rising transportation and material costs are straining the supply chain.

Health economist Professor David Matusiewicz echoed these concerns. “The ongoing conflict surrounding Iran is having a noticeable impact on global pharmaceutical supply chains—and thus also on the supply situation in Germany,” he said. While stressing that there is no immediate risk of widespread shortages, he warned that “the longer the conflict drags on, the more likely it is that there will be delivery delays, price increases, or temporary shortages of certain medications.”

German Health Minister Nina Warken had pointed to potential consequences for medicine supplies shortly after the outbreak of the war, emphasizing that many key medicine shipments pass through the Strait of Hormuz.

The API Dependency: Europe’s Structural Weakness Exposed

Beyond the immediate logistics disruptions, the conflict has laid bare a deeper structural vulnerability: Europe’s overwhelming dependence on imported active pharmaceutical ingredients. Currently, approximately 80 per cent of APIs used in the EU are sourced from China. Michael Kocher, CEO of Danish-based Xellia Pharmaceuticals, has warned that this figure could soon approach 100 per cent unless European governments intervene. Half of Xellia’s APIs are featured on both the EU’s critical medicines list and the WHO’s essential medicines list, including vancomycin hydrochloride, a crucial antibiotic ingredient used to treat severe, drug-resistant infections like sepsis.

The API market in Europe was valued at $21.7 billion in 2024, with anticipated growth at a CAGR of 7.3 per cent through 2032. Yet this growth masks a precarious reality: over recent decades, the production of API for generic medicines has progressively shifted outside the EU, primarily to China and India, leading to risk concentration and heightened vulnerability.

The European Parliament has recognized this as a critical challenge, noting that the EU’s increasing dependence on API supplies has led to “a partial loss of capability to manufacture active substances independently, which poses a potential threat to public health in the Member States.”

The war in the Middle East has now added a new layer of risk to this already fragile equation. With the Strait of Hormuz closed and air routes disrupted, the just-in-time supply chains that characterize much of Europe’s pharmaceutical manufacturing are being tested as never before. Richard Sullivan, professor of cancer and global health at King’s College London, told The BMJ that shortages are already beginning to emerge in the UK for complex biologics, APIs and even oncology drugs.

The Generics Industry: Manageable for Now, But Risks Are Growing

Europe’s generics and biosimilars industry, which supplies the majority of affordable medicines relied upon by healthcare systems across the continent, has so far demonstrated resilience. According to Medicines for Europe, the umbrella organization representing the off-patent medicines industry, current supply-chain pressures are seen as “manageable”.

However, the industry body has been careful to stress that this assessment depends heavily on the duration of the conflict. A prolonged war could raise the risk of shortages as suppliers are “starting to experience more challenges.” The International Generic and Biosimilar Medicines Association (IGBA) has warned that a prolonged conflict “could make solvent supply a critical concern,” while escalating costs and squeezed margins could affect the long-term sustainability of affordable medicines.

Nadya Wells, a medical supply chain researcher at the Geneva Graduate Institute’s Global Health Centre, explained the generics industry’s particular vulnerability: “We know from past crises that reduced air freight space means supply priority moves to higher value drugs, and that strains generics where margins are thin.”

The Sanctions Dimension: A Two-Way Street

The pharmaceutical impact of the war is not solely about logistics. Sanctions imposed on Iran—both by the UN and by the EU—have created a complex regulatory landscape that affects pharmaceutical trade in both directions.

The European Commission has repeatedly stated that EU sanctions do not prohibit the export of medical or pharmaceutical products to Iran, and that humanitarian exceptions exist under which operators can deliver necessary humanitarian aid. Yet in practice, banks, insurers, and shippers often engage in “de-risking”—avoiding any Iranian transactions to avoid potential penalties, effectively creating a chilling effect that extends to legitimate pharmaceutical trade.

Iran, for its part, has been building strategic reserves of medicines and seeking alternative sources to compensate for European supply disruptions. Half of Iran’s medicine exports are destined for European countries, with Poland and Norway considered emerging markets for Iranian pharmaceutical and technology-based companies. However, the Iranian pharmaceutical industry faces its own severe strain under renewed sanctions, with the Deputy Head of Iran’s Food and Drug Administration stating that EU sanctions have directly affected the country’s pharmaceutical imports.

For European patients, the sanctions dynamic carries indirect risks. The disruption of Iranian pharmaceutical production and export—Iran has achieved significant progress toward self-sufficiency in API production, exporting biotechnology drugs to 35 countries—removes a potential alternative supply source for European markets that have increasingly sought to diversify away from Chinese dependence.

The Ceasefire That Wasn’t

On 7 April, US President Donald Trump announced a two‑week ceasefire with Iran, offering a brief glimmer of stability for rattled supply chains. But any optimism proved short‑lived. On 12 April, talks in Islamabad between US and Iranian negotiators collapsed without a deal, with Iranian officials blaming the US side for shifting the goalposts when a memorandum of understanding was “just inches away”.

Hours later, Trump declared a naval blockade of the Strait of Hormuz. US Central Command announced that from 13 April, the blockade would apply to “all maritime traffic entering and exiting Iranian ports”. Iran has warned that the blockade could end the ceasefire altogether. Major General Ali Abdollahi of the Islamic Revolutionary Guard Corps stated that if the US continues its blockade, “this action by the US will constitute a prelude to a violation of the ceasefire,” adding that Iran “will not allow any exports or imports to continue in the area of the Persian Gulf, the Sea of Oman and the Red Sea”.

For Europe’s pharmaceutical industry, the failed ceasefire and the subsequent blockade have reintroduced a level of uncertainty that supply chain managers had hoped was receding. While some diplomatic channels remain open — Trump has signalled that talks could resume in Pakistan “over the next two days” — the immediate outlook is one of heightened risk. Jet fuel prices have doubled, commercial flights carrying temperature‑sensitive cargo continue to be cancelled, and the possibility of a prolonged blockade looms over the already fragile just‑in‑time supply chains that keep Europe’s medicines moving.

As Professor David Matusiewicz of the University of Applied Sciences in Germany warned earlier in the conflict, “the longer the conflict drags on, the more likely it is that there will be delivery delays, price increases, or temporary shortages of certain medications.” With the ceasefire under strain and a naval blockade now in effect, that warning has taken on a new urgency.

The Strategic Pivot: From Cost to Resilience

Perhaps the most significant outcome of the current crisis may be its effect on Europe’s long-term pharmaceutical strategy. Dorothee Brakmann of Pharma Deutschland has suggested that the Iran war should serve as a catalyst for profound transformation within the pharmaceutical industry, noting that in the context of war and global turmoil, the industry’s focus has already shifted from prioritizing cost to prioritizing supply chain resilience.

This shift is not merely rhetorical. The European Commission has proposed a Critical Medicines Act aimed at ramping up production of over 200 essential drugs. France has launched a €1.5 billion “Health Sovereignty” initiative for domestic API plants, while Germany has established a €1.2 billion resilience fund focused on antibiotics and analgesics. The EU Commission has allocated €3.2 billion in competitive grants and research alliances to support pharmaceutical manufacturing.

Yet critics argue these measures are insufficient and too slow. Michael Kocher of Xellia called the EU’s measures “too slow and timid,” urging immediate action: “We are seeking…a commitment to support ongoing operations.” Xellia, owned by Novo Holdings—the main shareholder of Novo Nordisk—sells to over 500 customers in 80 countries. The company has warned that transferring production from Copenhagen to its Chinese plant will take up to a decade, underscoring the scale of the challenge facing Europe.

The Centre for Long-Term Resilience, which submitted recommendations to the European Commission’s DG HERA, framed the issue in stark strategic terms: “The European Union faces a critical vulnerability in health security: overwhelming dependence on foreign manufacturers for medical countermeasures and their essential components. This dependency creates strategic risks where life-saving medicines could become weapons of economic coercion during geopolitical tensions.”

Outlook: The Shape of Things to Come

For now, European patients are unlikely to notice the disruptions at the pharmacy counter. The pharmaceutical industry’s ability to absorb shocks—stockpiling critical medicines, rerouting shipments, and drawing on alternative suppliers—has prevented the kind of visible shortages that defined the early COVID-19 pandemic.

But beneath the surface, the pressure is building. The combination of closed shipping routes, rising fuel costs (jet fuel prices have doubled), cancelled commercial flights that carry pharmaceutical cargo, and the ever-present risk of a prolonged conflict is steadily eroding the margins that keep Europe’s generic medicines affordable and available.

As Professor Matusiewicz told BILD, the immediate risk is not widespread shortages, but the risks are growing. The longer the conflict drags on, the more likely delivery delays, price increases, and temporary shortages become.

For Europe’s pharmaceutical industry, the Iran war is not merely a logistical problem to be managed until the ceasefire holds. It is a warning—a glimpse of a future in which geopolitical conflict, supply chain dependency, and public health intersect in ways that no amount of just-in-time inventory management can fully mitigate. The question now is whether European governments and industry leaders will treat this crisis as the catalyst for the deep structural changes that Brakmann and others have called for—or whether, when the straits reopen and the air routes resume, the urgency will fade, leaving Europe’s medicine cabinet once again exposed to the next geopolitical shock.