Why Are Pharmaceutical Raw Material Prices Increasing in India in 2026? Impact of China, Russia–Ukraine War and Israel–Iran Conflict

India's pharmaceutical industry is facing increasing cost pressures in 2026. Rising Active Pharmaceutical Ingredient (API) prices, chemical costs, international conflicts and supply-chain disruptions are creating challenges for pharmaceutical manufacturers.

From antibiotics and general APIs to veterinary medicines, solvents, excipients and packaging materials, rising procurement costs are affecting pharmaceutical manufacturing.

But what is driving these increases? How are China, the Russia–Ukraine war and the Israel–Iran conflict affecting India? And will raw material prices decrease in the next six months?

Let's understand the major factors and future market outlook.

1. Why Are Pharmaceutical Raw Material Prices Increasing?

The increase in pharmaceutical raw material prices is driven by several interconnected factors:

• China's dominance in global API manufacturing.

• Russia–Ukraine war and energy-market uncertainty.

• Israel–Iran conflict and West Asia supply disruptions.

• Rising crude oil and petrochemical prices.

• Higher shipping, freight and insurance expenses.

• Indian rupee fluctuations against the US dollar.

• Increasing prices of solvents and chemical intermediates.

These factors increase the cost of producing, importing and transporting pharmaceutical ingredients.

2. China's Influence on India's Pharmaceutical Raw Material Market

China is one of India's largest suppliers of APIs and pharmaceutical intermediates.

According to the Department of Pharmaceuticals, China accounted for approximately 73.7% of India's API, bulk drug and intermediate imports by value in FY 2024–25.

Changes in Chinese manufacturing costs, environmental regulations, export policies, factory shutdowns and supply availability can directly influence Indian procurement prices.

China's influence is particularly important in antibiotics, fermentation-based APIs, vitamins and chemical intermediates.

The withdrawal of certain Chinese export VAT rebates from April 2026 has also been identified as a factor supporting API price recovery in FY 2026–27.

Impact: India's dependence on imported pharmaceutical ingredients makes manufacturers vulnerable to international price fluctuations and supply disruptions.

3. Impact of the Russia–Ukraine War

The Russia–Ukraine war affects pharmaceutical manufacturing mainly through indirect economic factors.

• Energy costs: Oil and gas price fluctuations can increase chemical manufacturing expenses.

• Chemical production: Higher energy costs can make pharmaceutical intermediates more expensive.

• Commodity markets: International trade uncertainty can influence industrial input prices.

• Logistics: Changes in trade routes and transportation costs can affect procurement.

The war is an indirect cost factor rather than a proven direct cause of individual API price increases.

4. Impact of the Israel–Iran Conflict

The 2026 Israel–Iran conflict and wider West Asia crisis have created additional pressure on international energy and shipping markets.

The Strait of Hormuz is a strategic route for global energy transportation. Disruptions in this region can affect crude oil, petrochemicals, solvents, shipping and insurance costs.

In April 2026, the Indian government acknowledged disruptions in pharmaceutical input supply chains, particularly involving solvents and APIs. It also announced zero customs duty on 40 petrochemical products.

Impact: The West Asia crisis has become an important immediate supply-chain concern for Indian pharmaceutical manufacturers.

5. Rising Crude Oil, Solvent and Chemical Prices

Crude oil is an important feedstock for several chemical and petrochemical industries. Although not every API is petroleum-derived, many solvents, intermediates and packaging materials depend on petrochemical inputs.

Some important materials include:

• Isopropyl Alcohol (IPA).

• Methanol.

• Propylene Glycol.

• Acetic Anhydride.

• Dimethyl Formamide (DMF).

• HDPE bottles and plastic packaging materials.

Reported March 2026 price comparison

Raw materialEarlier priceReported priceIncreaseIsopropyl Alcohol₹90/kg₹120/kg33.3%Dimethyl Formamide₹68/kg₹125/kg83.8%Dimethyl Sulphate₹45/kg₹62/kg37.8%Acetic Anhydride₹60/kg₹95/kg58.3%

Source: March 2026 industry-reported quotations. These are indicative figures, not current October prices or nationwide averages.

6. Last Eight Months: Pharmaceutical Raw Material Market Comparison

Between March and October 2026, the market experienced price increases, temporary corrections and renewed supply pressure.

MonthMarket developmentsMarchSharp increases in solvents and selected APIsAprilSupply disruptions and rising chemical costsMayContinued procurement uncertaintyJuneTemporary price corrections in some APIsJulyEnergy and freight costs remained importantAugustContinued pressure on industrial input costsSeptemberSelected APIs reportedly increased by 20–40% over the previous monthOctoberContinued geopolitical and supply-chain uncertainty

Selected API price increases in September 2026

Industry reports highlighted increases of approximately 40-250% in selected APIs, including:

• Paracetamol

• Metformin

• Valsartan

• Losartan

• Candesartan

• Irbesartan

• Omeprazole

• Pantoprazole

• Rabeprazole

These increases were associated with tighter availability, logistics expenses and higher chemical input costs. They do not represent the entire Indian API market.

India's broader wholesale price indicators

September 2026 Wholesale Price Index inflation:

CategoryYear-on-year inflationAll commodities11.39%Fuel and power25.85%Manufactured products9.76%

These figures reflect wider industrial inflation, not pharmaceutical-specific price increases.

7. Impact on Third-Party Pharmaceutical Manufacturing

Increasing raw material prices create several challenges for third-party pharmaceutical manufacturers.

Higher production costs: Increasing API, excipient and packaging prices affect the cost of tablets, capsules, syrups, dry syrups and veterinary boluses.

Quotation fluctuations: Manufacturers may need to revise quotations when supplier prices change.

Profit margin pressure: Fixed-price orders become more challenging when procurement costs increase.

Production delays: Shortages of essential APIs and chemicals can affect manufacturing schedules.

Working capital requirements: Higher procurement prices require additional funds to maintain inventory.

Maintaining quality, competitive pricing and timely delivery becomes increasingly important.

8. Next Six Months Forecast: November 2026–April 2027

Will pharmaceutical raw material prices decrease in the next six months?

Based on available market indicators, prices may remain elevated and volatile, although individual APIs could experience corrections.

The World Bank's October 2026 Commodity Markets Outlook projects:

• Global commodity prices to increase by 23% in 2026.

• Energy prices to increase by 32% in 2026.

• Overall commodity prices to decline by approximately 7% in 2027.

• Energy prices to moderate in 2027.

These are global commodity forecasts, not direct API price forecasts.

Month-wise market outlook

PeriodExpected market situationNovember 2026Elevated prices and procurement uncertaintyDecember 2026Continued energy and freight cost pressureJanuary 2027Possible stabilisation if supply improvesFebruary 2027Some APIs may correct, while others remain expensiveMarch 2027Dependent on energy prices and global supplyApril 2027Price moderation possible, but earlier prices are not guaranteed

Why might prices not decrease immediately?

1. Suppliers may still hold expensive inventory.

2. India remains dependent on imported APIs and intermediates.

3. Energy and petrochemical costs may remain elevated.

4. Shipping and insurance costs can fluctuate.

5. Rupee depreciation can increase import expenses.

Market outlook: Manufacturers should prepare for continued price volatility rather than assume an immediate return to earlier prices.

9. How Can Pharmaceutical Manufacturers Manage Rising Costs?

Manufacturers can take several practical steps:

• Develop relationships with multiple qualified suppliers.

• Maintain appropriate inventory of frequently used APIs.

• Monitor raw material quotations regularly.

• Negotiate bulk procurement wherever commercially viable.

• Review product quotations when material prices change.

• Explore reliable domestic sourcing alternatives.

• Maintain strict quality and regulatory standards.

India's investment in domestic API manufacturing through PLI schemes and bulk drug parks can also help reduce long-term import dependence.

Conclusion: Will Pharmaceutical Raw Material Prices Come Down in 2027?

The pharmaceutical raw material market in India has experienced considerable uncertainty during 2026.

China's influence on API supply, the Russia–Ukraine war's indirect impact on energy markets, the Israel–Iran conflict, rising crude oil prices, shipping disruptions and currency fluctuations have all contributed to procurement challenges.

Although some materials experienced temporary price corrections, selected APIs and chemicals recorded significant increases during the year.

Looking ahead to April 2027, some price moderation is possible, but a uniform reduction across all pharmaceutical raw materials cannot be guaranteed.

For pharmaceutical manufacturers, the priority should be to maintain quality, strengthen procurement planning, diversify suppliers and build a reliable supply chain.

At Altarsri Labs, we recognise the importance of quality-driven pharmaceutical manufacturing, reliable procurement and long-term business partnerships in an evolving pharmaceutical industry.

Altarsri Labs – Human & Veterinary Pharmaceutical Manufacturing Company.

Website: https://altarsrilab.com

Email: marketing@altarsrilab.com

Contact: +91 7088004932

Frequently Asked Questions

1. Why are pharmaceutical raw material prices increasing in India in 2026?

Major factors include China's API supply dominance, geopolitical conflicts, rising energy costs, shipping expenses and currency fluctuations.

2. Is China responsible for increasing API prices?

China supplies a major share of India's imported APIs and intermediates. Changes in its manufacturing and export costs can influence Indian prices.

3. Does the Russia–Ukraine war affect pharmaceutical manufacturing?

Yes, indirectly through energy, commodity and transportation costs.

4. Does the Israel–Iran conflict affect pharmaceutical raw material prices?

Yes. West Asia disruptions can affect petrochemicals, solvents, shipping and imported pharmaceutical inputs.

5. Will pharmaceutical raw material prices decrease in 2027?

Some materials may experience corrections if global supply improves, but a uniform price reduction is not guaranteed.

6. How can third-party manufacturers manage rising costs?

By diversifying suppliers, maintaining planned inventory, monitoring procurement prices and improving production efficiency without compromising quality.

Market information and forecasts are based on information available up to October 2026. Historical quotations are indicative, and future price movements are not guaranteed.

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