In brief
The ongoing conflict in the Middle East has increased instability across key commercial routes, with congestion in the Strait of Hormuz and disruptions at major Gulf air hubs leading to reduced capacity and transit delays. For global medical supply chains, where speed, integrity, and controlled transport conditions are critical, these delays are creating immediate operational risks and challenges to the delivery of such sensitive products.
In more detail
A global system facing heightened vulnerability
Pharmaceutical supply chains operate on a highly global scale, with manufacturing and distribution activities spread across multiple regions. Ingredients are often sourced from one location, medicines manufactured in another, and products distributed through complex international logistics networks. While this integrated model has delivered efficiencies and reduced costs, it has also exposed structural vulnerabilities that make supply chains particularly sensitive to disruption, especially in the context of ongoing conflicts in the Middle East.
A critical area of exposure is the pharmaceutical sector’s sensitivity to energy-related cost pressures, given the energy-intensive nature of producing active pharmaceutical ingredients (APIs). Fluctuations in global oil and gas prices can therefore have a material impact on operation costs across the industry. Further, medicines requiring refrigeration, such as vaccines, face additional risks, as they are typically transported by air freight and are vulnerable to delays affecting temperature-controlled zones. More broadly, the industry’s heavy reliance on APIs sourced from China and India further compounds supply-side exposure. While attention often is on energy and oil, changes in energy prices directly affect the upstream materials and processes that underpin pharmaceutical manufacturing across multiple stages of the supply chain.
The Gulf Cooperation Council’s (GCC) central role in global medicine flows
The GCC plays a central role in connecting pharmaceutical manufacturers in Asia and Europe with markets across Africa, North America, and beyond. The region’s pharmaceutical market is estimated at about USD 23.7 billion, with close to 80% reliant on imports that move through GCC airspace and/or the Strait of Hormuz. Dubai’s cargo airport ranked the eleventh busiest globally in 2024, supported by expanded cold-chain infrastructure, proximity to Jebel Ali Free Zone and its container port, and nearly 4 million tons of annual air-cargo capacity handling a substantial share of temperature-sensitive medical shipments.1
Recent airspace disruption has reduced regional capacity; in one month alone, Dubai was estimated to be unable to process more than 10,000 tons of pharmaceutical cargo, affecting both commercial and humanitarian flows. As some Gulf corridors tighten, shipments are being redirected through alternative gateways, including airports in Riyadh and Jeddah, with onward movement by road. If disruptions persist, shortages of essential medicines, particularly oncology drugs, could emerge quickly if routings and capacity are not stabilized.2
Implications for the healthcare industry
Pharmaceutical companies are forced to reassess supply chain resilience as congestion, cost pressure, and delivery uncertainty disrupt operating models. Key themes include diversifying logistics routes, strengthening inventory strategies for critical therapies, improving visibility over upstream raw-material constraints, and meeting heightened regulatory and investor expectations on continuity and crisis planning.
During the COVID-19 period, many companies introduced short-term buffers and sought alternative suppliers to address acute disruption. However, these measures were temporary and were not always embedded into long-term supply chain strategy. The evolving situation across the Gulf has highlighted the critical role the region plays in global pharmaceutical logistics. As airspace restrictions, route diversions and cost pressures continue, healthcare companies must balance immediate operational needs with long term resilience planning. The ability to sustain manufacturing and distribution through periods of significant disruption will increasingly be a key driver of competitiveness and core to the industry’s operations.
Legal considerations
- Sanctions awareness: Rerouted shipments must avoid restricted carriers, ports or counterparties.
- Customs: Conflict-driven rerouting may result in enhanced customs scrutiny. Goods entering GCC markets through alternative pathways risk valuation disputes or classification issues. Products appearing on the mainland without proper customs processing may be treated as smuggling under the GCC Common Customs Law.
- Contractual practicalities: Changes in transit time, cost or feasibility may interact with force-majeure language in supply agreements.
- Regulatory compliance: Any deviation from approved transport conditions, particularly temperature control, may trigger reporting obligations or supplemental quality documentation.
At Baker McKenzie, we continue to monitor developments closely and support clients in navigating the commercial, regulatory and supply chain implications of this rapidly shifting landscape.
1 Where the Iran War Could Disrupt Pharmaceutical Supply Chains | Think Global Health (20 March 2026).
2 Drugmakers reroute to Saudi Arabia as Iran war chokes Gulf medicine supply｜Arab News Japan (18 March 2026).