Oil shock hits Asia’s drugmakers as petrochemical crunch squeezes supply chains

Almost all pharmaceutical raw materials trace back to petrochemical origins.

Oil and gas disruptions are affecting pharmaceutical production across Asia-Pacific (APAC) as supply chains for active pharmaceutical ingredients (APIs) and basic drug inputs tighten, the Asian Development Bank (ADB) said in a recent report.

Medicines across all categories rely on petrochemical-derived inputs—including common painkillers such as paracetamol and ibuprofen—which are synthesised using propylene, a crude oil derivative.

Antibiotics, statins, insulin, and chemotherapy drugs also depend on petrochemical-derived intermediates at various stages of production.

Pharmaceutical delivery systems also depend on petrochemicals, as intravenous bags, syringes, nitrile gloves, and medical plastics use polymers derived from oil and gas feedstocks.

The bank cited a 2011 study published in the American Journal of Public Health, which revealed that 3% of petroleum production is used in pharmaceutical manufacturing.

The same study also found that almost all pharmaceutical raw materials trace back to petrochemical origins.

APAC sits at the centre of the exposure, with India producing nearly half of global generic medicines and around 65% of essential vaccines.

Since it also imports about 40% of its crude oil through the Strait of Hormuz, disruptions to that route affect energy inputs for pharmaceutical production.

ADB also cited China, which is the largest global producer of pharmaceutical raw materials and APIs.

India imports more than one-third of its APIs, with around 70% sourced from China, which creates interdependence between the two countries in drug supply.

Prices for APIs have increased as supply tightens, the bank noted.

Supply pressure also increases the risk of counterfeit medicines entering distribution channels, with the World Health Organisation estimating that more than 50% of medicines purchased from illegal online pharmacies are fake.

Authorities in India, Cambodia, Pakistan, and Vietnam have issued warnings on counterfeit medicines.

Regulatory capacity varies across the region, with weak enforcement increasing the risk of substandard or falsified medicines entering supply chains during shortages.

Governments in the region face pressure to stabilise access to medicines, ADB noted.

Policy options include defining essential medicines, setting price controls, suspending import duties and tariffs on APIs and finished products, and applying short-term energy subsidies to pharmaceutical manufacturers during supply disruptions.

Regulators can increase post-market surveillance and inspections of imported and domestically produced medicines.

Health systems can also issue guidance to healthcare providers and pharmacists on identifying and reporting falsified products.

Primary care facilities in lower-income areas face higher exposure during supply disruptions.

Development agencies can support countries in managing pharmaceutical supply risks during energy shocks.