Pharma industry grapples with cost, supply issues

By Beatriz Marie D. Cruz, Senior Reporter

THE pharmaceutical industry is bracing for higher costs as the conflict in the Middle East disrupts global supply chains that the Philippine drug industry depends on, industry executives said.

They noted, however, that some drug manufacturers have sufficient inventory to cover the next 12 months, beyond which they, too will be under pressure if the fighting is prolonged.

Maria Blanca Kim Bernardo-Lokin, president and chief executive officer of Philippine Pharma Procurement, Inc. (PPPI), said the pharmaceutical industry remains import‑dependent, leaving it vulnerable to supply chain disruptions.

“Most, if not all, raw materials used in the drug manufacturing process are imported. Beyond medicines, we source our medical supplies, machines, and vaccines almost exclusively through importation,” she said via Viber.

The industry also imports key ingredients for so-called lifestyle medicines like potassium, sodium, calcium, and magnesium salts, Ms. Lokin added.

She said supply chain disruptions stemming from the Middle East conflict are likely to widen the pharmaceutical trade deficit, which was $2.3 billion in 2025, Fitch Solutions unit BMI reported in March.

Ms. Lokin said that the conflict will eventually drive up the price of medicine.

“While prices are expected to increase — for both manufacturers and consumers alike — PPPI has been regularly conferring and coordinating with industry stakeholders to ensure the steady supply of essential medicines,” she said.

“We are very much affected since almost 95% of our raw materials and 50% of our packaging materials are imported,” Philippine Pharmaceutical Manufacturers Association (PPMA) President Higinio P. Porte, Jr. told BusinessWorld via Viber.

He said the peso breaching the P60-per-dollar mark last month will also increase costs for drug manufacturers.

“On top of this, per unit cost will also increase in the next two months by about 5% to 15%,” Mr. Porte added.

Diana M. Edralin, president of the Pharmaceutical and Healthcare Association of the Philippines (PHAP), said drug manufacturers remain “significantly exposed” to global trade disruptions.

“The Middle East serves as a vital artery for global shipping and logistics networks that facilitate the movement of essential goods, including pharmaceutical products and raw materials,” she said in an e-mail.

“We note that there are already delays in the replenishment of stocks for some medicines due to the conflict,” Ms. Edralin noted.

She said that while there are no signs of shortages, uncertainty over the duration of the Iran war poses risks.

For now, PHAP members have multiple international suppliers to avoid relying on a single trade route, according to Ms. Edralin, who is also the general manager of Roche Philippines, Inc.

Some producers have also activated their business continuity plans due to the conflict, she added.

PPMA’s Mr. Porte said many drug manufacturers have enough stock in the near-term.

“We are not seeing immediate supply chain disruptions as our suppliers are also bound by long-term supply agreements,” he said.

Mr. Porte noted that some members have six to 12 months’ worth of materials.

“But if the situation extends for several months and our buffer is depleted, we have to replenish at a much higher cost,” he said.

To cushion the impact of external shocks, Ms. Lokin cited the need to develop more pharmaceutical economic zones.

Pharmaceutical shipments should also pass through green lanes to minimize delays and added costs, Ms. Edralin said.

She also cited the need to expand cold chain and storage capacity for medicine, and ensuring that pharmaceuticals are granted priority fuel allocation.

Other measures include the adoption of a six-month national inventory buffer; institutional demand forecasting to ensure the timely procurement of medicine; and the establishment of a logistics command center to mobilize supply during crises, Ms. Edralin said.