The big three in trouble

The Middle East conflagration with its world-wide ramifications is slowly & surely affecting health delivery.  The prominent factor of health delivery is accessible and affordable stock of medicines in the pharmacy.  Input costs for manufacturing generics is zooming up, as it is generics have lower margin, and add to the boiling fire there is a dilemma of higher shipping costs.  Hence, contraction of demand leading to negative impact on economies of scale further complicates matters in generic production and distribution, and all countries are affected - Middle East countries and others.

The big three

Manufacturing of generic pharmaceuticals involves using excipients and the big three excipients are: 

a) magnesium stearate that is present in 50% to 60% of oral dosage forms as a lubricant and as an overall excipient of tablets and capsule

b) MCC or microcrystalline cellulose that is used as binder, diluent and filler to hold the tablet matrix together

c) And we have finally, lactose (monohydrate/anhydrous) used as a bulk filler to make up the volume and weight of tablets

The production of magnesium stearate depends heavily on vegetable fats/oils and upstream chemical solvents, while MCC (microcrystalline cellulose) relies on specialized wood pulp and chemical reagents. The escalation of the Middle East war has heavily disrupted global oil, gas, and energy markets. This has translated directly into a 200% to 300% surge in raw chemical material prices within compressed timeframes, directly shrinking the profit margins of generic manufacturers who operate under strict government price controls.  Western Europe (led by companies like DFE Pharma in the Netherlands and Germany) is the central global hub for high-grade pharmaceutical lactose. Severe trade tensions and disruptions around the Persian Gulf and the Strait of Hormuz have heavily penalized input materials for the global dairy industry.  All this has affected generics manufacturing, buffer stocks of 2 to 3 months has saved the situation, however supply constraints, high price of new stocks is squeezing the margins of generic manfacturing - and this will have its toll on medicine availability from the pharmacy of the world: India.  No country will be spared from this ill effect of Middle East war on medicine availability including USA and advanced countries.  

India provides 20% of world's generics, 45% of generics in USA, 25% of all medicines of UK, 50% of medicines in Africa and 50% to 60% of the world's vaccines.  Generics from India are a life line to all the 200 countries of the world.  This high volume of generics production and distribution to the world depends on manageable raw material costs, efficient logistics and judiciously priced energy costs.  Besides, important medicines under price watch of NPPA are called scheduled drugs - and they have heavy margin squeeze.  The answer to all these issues is for the policy makers to keep an eagle eye daily, on the supply and price situation of APIs, intermediates and excipients including the big three (magnesium stearate, MCC and lactose), so India can seamlessly provide affordable generics to its citizens and the world.

As per newspaper reports India’s pharmaceutical exports dropped over 23% by early 2026. Trade bodies estimate that these disruptions could cost Indian drugmakers between $300 million and $600 million.  If there is supply problems there is also a looming danger of widespread factory shutdowns and severe global medicine shortages.  Quelle catastrophe ! (What a catastrophe!)      

 Thanks for reading, written by - Dr. Sunil S Chiplunkar M Pharm PhD MBA PGDHRM