Asian medical device markets face cost shocks amidst Iran conflict

The Strait of Hormuz is the chokepoint of the market.

Energy price volatility and shipping delays from the escalating military conflict in the Middle East threaten medical device supply chains in Asia, according to a BMI report.

South Korea, Japan, Singapore, and India face exposure to increased manufacturing and distribution costs due to reliance on energy imports through the Strait of Hormuz.

This follows US and Israel’s military operation against Iran on 28 February 2026, with the latter responding with air strikes against US military bases in Gulf Cooperation Council countries.

The Strait of Hormuz handles 20% of global oil trade and 20% of global liquefied natural gas trade, and serves as a transit point for 3% to 4% of global container volumes.

Medical device production relies on electricity for cleanrooms and sterilisation processes, whilst requiring petrochemical-based inputs such as plastics and polymers, the report said.

Manufacturers in Asia and Europe face higher electricity rates, fuel costs, and input prices for these materials, whilst the US remains less affected due to domestic oil and gas production.

Shipping carriers have halted transits through the strait, diverting vessels around the Cape of Good Hope and adding 10 to 14 days to delivery times for medical consumables, reagents, and spare parts.

The report noted that India faces risks as it imports high-end medical devices from the US and Europe through Gulf transshipment hubs.

Costs for air freight and insurance have also risen, affecting high-value, temperature-controlled cargo including diagnostic imaging, orthopaedics, and cardiovascular implants. Capacity constraints on these routes increase landed costs and risk delivery delays.

A prolonged conflict would shift logistics challenges from regional to global as sustained high energy prices compress manufacturer margins and strain public healthcare budgets, the report noted.

Hospitals in emerging markets may defer purchases of capital equipment—such as imaging upgrades—to prioritise essential consumables, forcing manufacturers to seek supply chain diversification through regionalisation and multisourcing.