New Delhi: The ongoing war in West Asia has pushed up costs of medical devices by between 10 percent and 50 percent, depending on the product category, according to estimates by Andhra Pradesh MedTech Zone (AMTZ), India’s largest medical device manufacturing cluster.
Launched in 2016, the AMTZ is a state-government-backed hub of around 165 manufacturing companies, including about 30 foreign firms, focused on R&D, manufacturing, and testing of medical devices, ranging from syringes and masks to complex equipment such as ventilators, Magnetic Resonance Imaging (MRI) scanners and cardiac stents.
According to Dr Jitendra Sharma, managing director and founder CEO of AMTZ, high-volume consumables such as syringes, catheters, and disposable plastics have seen a 40-50 percent increase in raw material costs—driven by rises in polypropylene and PVC prices — and a 15-25 percent increase in packaging costs, directly hitting margins.
Dr Sharma said that advanced imaging systems are more vulnerable. MRI machines are exposed to helium supply disruptions, with over 70 percent of global supply concentrated in a handful of regions, while CT systems are facing component import delays, pushing installation timelines back by two to six weeks.
“The impact is not uniform — it ranges from 10 percent to 50 percent cost pressure depending on the segment, with imaging and consumables being the most affected,” Sharma told ThePrint.
The conflict in West Asia has disrupted global shipping routes through the Strait of Hormuz, a chokepoint through which a significant share of the world’s crude oil and petrochemical exports pass.
This has driven up energy costs to about twice their pre-war levels, directly feeding into the price of petrochemical feedstocks—the building blocks of the plastics and polymers that India’s medical device and pharmaceutical industries depend on.
The disruption is also affecting 30-40 percent of global trade routes linked to the region, creating logistical delays that compound raw material cost pressures, according to AMTZ estimates.
For ventilators, oxygen concentrators and RT-PCR kits — used for respiratory support and disease diagnostics, respectively — Dr Sharma said that component lead times had increased by 20–30 percent, especially for sensors, compressors, and reagents.
Component lead times are the total time from the initiation of a purchase order to its final delivery and availability for use, covering order processing, manufacturing, shipping and inspection. This metric is crucial for production planning to prevent shortages, often ranging from several weeks for common items to months for complex components.
Cardiac stents and surgical instruments have been relatively more stable, but are still seeing a 10–15 percent cost escalation due to higher prices of specialty alloys, coatings and sterilisation inputs, Dr Sharma said.
According to Divya Patil, materials scientist at AMTZ, the manufacturers are currently operating with two to four weeks of inventory buffer, which provides short-term stability.
But if disruptions persist beyond that window, the probability of localised shortages rises sharply—to 60–70 percent—particularly for MSMEs that lack deep reserves.
“In the immediate term, the next two to three weeks, the risk remains moderate, between 20–30 percent, but beyond four to six weeks of sustained disruption, it can escalate to high risk of over 60 percent, especially for high-volume consumables like IV sets, syringes, and diagnostic disposables. So the situation is stable today, but time-sensitive and rapidly evolving,” she told ThePrint.
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$500-$750 million loss if war continues till end-April
In a letter dated 23 March to Commerce Minister Piyush Goyal, the Association of Indian Medical Device Industry (AiMeD) had flagged a nearly 50 percent rise in prices of critical plastics used in medical disposables, an over 20 percent increase in packaging materials, and a near-doubling of piped gas prices that manufacturers rely on for boilers and process heating.
AiMeD wrote that there was no shortage of syringes or other medical disposables currently, but warned that if disruptions persisted, production slowdowns and hospital shortages could follow. Following this, the Ministry of Finance announced a full customs duty exemption last week on critical petrochemical products, effective until 30 June.
On 13 March, industry body the Federation of Pharma Entrepreneurs (FOPE) wrote to the Department of Pharmaceuticals, warning of a 20-60 percent surge in prices of APIs—Active Pharmaceutical Ingredients, the raw chemical compounds that give medicines their effect—and sharp increases in PVC and packaging materials within days of the conflict’s escalation.
“An unprecedented crisis threatens the survival of the pharmaceutical industry,” the body wrote, warning of possible supply constraints on high-volume essential medicines, including paracetamol, amoxicillin, metformin and azithromycin.
What initially seemed like a short-term disruption has grown into something more serious, Namit Joshi, chairman of Pharmexcil (the Pharmaceuticals Export Promotion Council of India), told ThePrint.
“If the war continues until the end of April, the impact could last at least six months, resulting in a loss of $500-750 million. As the pharma solvent and packaging supply chain is heavily reliant on crude oil and gas, any disruptions will severely affect the API and packaging industries, causing significant impacts on both exports and domestic manufacturing,” he said.
30-40% upstream dependency remains
India is significantly better prepared today, with a fully integrated ecosystem capable of manufacturing everything from high-volume consumables—gloves, syringes, and IV sets with 60–70 percent localisation—to advanced systems like CT and MRI subsystems and precision implants, Dr Sharma said.
In 2020, the government launched the Production Linked Incentive (PLI) Scheme for Promoting Domestic Manufacturing of Medical Devices, with a budgetary outlay of Rs 3,420 crore, after assessing that imports accounted for over 85 percent of the domestic medical devices market.
As of December last year, 24 greenfield projects have been commissioned under the scheme and production has begun for 57 products, including MRI machines, CT scanners, linear accelerators and X-ray machines—devices on which India had historically been heavily import-dependent, according to data tabled in the Lok Sabha last month.
Dr Sharma explained that increased localisation has reduced dependence on fragmented global supply chains, enabling faster response to disruptions.
Even so, a 30-40 percent upstream dependency on specialty materials and electronics remains—meaning that while India assembles and manufactures the final devices, the raw materials and components that go into them are still largely sourced from abroad, leaving the industry exposed when global supply chains are disrupted.
“AMTZ is currently working on alternative raw materials such as polymer substitutions and bio-based materials, and on reduced-dependency technologies for critical inputs like helium,” he added.
Operationally, he said, reliance on diversified and alternative materials can absorb short-term shocks of two to four weeks.
What can prevent supply gap?
Immediate interventions, Patil explained, must be both quantitative and targeted. Inventory coverage needs to be pushed from the current two to four weeks to six to eight weeks for critical consumables and inputs.
The urgency is underscored by the structure of India’s medical device import dependency. India imports roughly 70–80 percent of its medical devices by value, with high-end imaging equipment, implants, and diagnostic instruments among the most import-reliant categories.
While domestic manufacturing has grown, upstream components like sensors, compressors, speciality polymers, and rare gases like helium remain largely sourced from abroad, leaving manufacturers exposed when global supply chains seize up.
Patil said that for several critical inputs, India currently sources over 60-70 percent of its supply from a single region—a concentration that leaves manufacturers with little cushion when that region is disrupted. That dependency, she said, needs to come down by spreading purchases across multiple geographies.
On procurement, she said manufacturers need to move away from buying materials at whatever the market price happens to be on a given day—which is highly unpredictable right now—and instead sign longer-term supply agreements in advance, locking in prices and volumes for 70-80 percent of their requirement.
On the technology side, Dr Sharma pointed to the transition to low-helium MRI systems as a critical fix—systems that bring helium requirements down from 1,500 litres to under 20 litres, including zero boil-off magnet designs and emerging cryocooler-based helium-free MRI technologies.
“These steps, taken together, can collectively reduce supply risk by 30-50 percent in the short term and significantly improve system resilience,” Dr Sharma said.
(Edited by Sugita Katyal)
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