The Iran war’s impact on pharmaceutical supply chains is no longer theoretical. Evonik, a major supplier of pharma-grade amino and keto acids, announced a 15% price increase effective immediately, citing rising energy, raw material, and shipping costs caused by the conflict. This is the first concrete cost pass-through from a major pharmaceutical input supplier since the war began in late February. Strait of Hormuz shipping remains approximately 90% below pre-war levels. India, which supplies approximately 18% of all API facilities serving the U.S. and produces upwards of 35% of the total U.S. API supply, is rerouting exports through alternative corridors at air cargo rates up to 350% higher than pre-war levels. Generic drug margins—already razor-thin—are under severe pressure. The USP warned that “petroleum-derived inputs are essential to the production of key starting materials, so rising energy prices could further compress margins.” For three months, the industry relied on inventory buffers and cargo rerouting to avoid shortages. That buffer is thinning. Meanwhile, biotech executives sent a letter to President Trump recommending former FDA cancer regulator Dr. Richard Pazdur as the next commissioner. And gene therapy, one of the most promising modalities in medicine, received two safety signals in the same week.
Top Story: Iran War Supply Chain Disruptions Are Now Hitting Pharma Directly
What’s Happening: The U.S.-Israel military operation against Iran, now in its third month, has effectively closed the Strait of Hormuz, a critical global shipping corridor through which roughly 20% of the world’s oil supply and 10 to 20% of global pharmaceutical commerce passes, according to the Council on Foreign Relations. Endpoints News reported Tuesday that Evonik raised prices 15% effective immediately on amino and keto acid products used in pharmaceutical manufacturing.
The Scale of the Disruption
The Strait of Hormuz disruption affects pharmaceutical supply chains at multiple points simultaneously.
Shipping: Strait of Hormuz shipping remains approximately 90% below pre-war levels, according to Think Global Health. Vessels that historically transited the Strait are rerouting around the Cape of Good Hope, adding weeks to delivery times and significant cost to maritime freight.
Air cargo: Global air cargo capacity dropped 79% in the Gulf region in the early weeks of the war. Indian air cargo rates have surged up to 350% on certain corridors. Many Indian API exports historically transit through Gulf air hubs including Dubai, Abu Dhabi, and Doha—all of which have been disrupted by the conflict.
Energy and raw materials: Rising oil prices are increasing petrochemical-derived API costs. Many active pharmaceutical ingredients begin as petrochemical derivatives, meaning energy price increases flow directly into the cost of drug manufacturing. The USP explicitly warned that “petroleum-derived inputs are essential to the production of key starting materials.”
India’s Central Role in the U.S. Drug Supply
India supplies approximately 18% of all API facilities serving the United States and produces upwards of 35% of the total U.S. API supply, according to the USP. The country is the world’s largest producer of generic medicines. The disruption of Gulf shipping and air cargo routes forces Indian manufacturers to reroute exports through longer, more expensive corridors—costs that are ultimately passed through to buyers or absorbed by manufacturers already operating on thin margins.
The rerouting challenge is not just about cost. Pharmaceutical products have temperature sensitivity, stability requirements, and regulatory documentation that makes rerouting more complex than standard cargo. Changing shipping lanes means changing customs pathways, storage facilities, and quality assurance checkpoints. Each change introduces potential delays that affect product availability downstream.
Generic Drug Margins Cannot Absorb Sustained Increases
The generic pharmaceutical sector is the most immediately vulnerable to supply chain cost increases. According to the USP’s 2024 Annual Drug Shortages report, a third of oral medicines in shortage are priced below $1 per unit, and almost half of injectables in shortage are priced below $5. These are products with margins so thin that even small increases in transportation or raw material costs can make individual products uneconomical to produce.
When a generic drug becomes uneconomical to manufacture, the manufacturer does not raise prices—generic pricing is constrained by competitive dynamics and PBM contracts. Instead, the manufacturer discontinues the product. That discontinuation becomes a drug shortage. BioProcess Insider reported that some countries, including the UK, are expecting medicines shortages within weeks.
The United States has been partially insulated so far. The White House ordered HHS to build a six-month stockpile of 26 essential medicines in mid-2025, providing a temporary buffer against supply disruptions. But that buffer is finite, and it covers only 26 products out of thousands of generics in the U.S. formulary. If the conflict persists through the summer, shortages could emerge in Q3 or Q4 for products not covered by the stockpile.
Clinical Trials Are Also Being Disrupted
Phesi, a data science company, found that 6.7% of global clinical trials have been impacted by Middle East disruptions, with the biggest effects on drugs for lung cancer, breast cancer, heart failure, and multiple myeloma. Trials in Turkey, Israel, and Egypt have been particularly affected. For sponsors with trial sites in these regions, the disruption means delayed enrollment, modified protocols, or site replacements—all of which add cost and time to drug development.
Our Pro brief includes the full supply chain deep dive: how the Iran war is compressing generic margins, which product categories are most vulnerable to shortage, why the U.S. buffer is finite, and how Section 232 tariff incentives for domestic manufacturing take on new urgency in this context. [Details below.]
What to Watch
More supplier price increases are likely in the coming weeks as raw material and shipping costs continue to flow through the supply chain. Watch for generic drug discontinuation notices and FDA shortage notifications. If the Strait of Hormuz remains effectively closed through Q3, the temporary insulation provided by U.S. inventory buffers will begin to erode. The Section 232 tariff framework, which was designed to incentivize domestic pharmaceutical manufacturing, takes on renewed strategic importance in this context—companies with U.S.-based API and finished-dosage production are insulated from both tariff costs and Strait of Hormuz disruptions.
Biotech Leaders Pitch Pazdur as Next FDA Commissioner
What Happened: A group of biotech executives sent a letter to President Trump recommending former FDA cancer regulator Dr. Richard Pazdur to lead the agency, according to BioSpace.
Why Pazdur
Pazdur served as director of the FDA’s Oncology Center of Excellence for more than a decade before leaving earlier this year, citing Makary’s leadership as his reason for departing. He is widely respected across the pharmaceutical industry and oncology community for accelerated approval innovations and patient-focused regulatory decisions. His tenure at the OCE established the regulatory framework that enabled breakthrough designations, accelerated approvals based on surrogate endpoints, and real-time oncology review—programs that transformed how cancer drugs reach patients.
For the biotech industry, Pazdur represents institutional continuity. He understands the FDA from the inside. He has relationships with career staff across the agency. He would bring immediate credibility on drug development decisions at a time when the agency’s leadership infrastructure is depleted—both CDER divisions are headed by acting directors, and morale has been described as having “plummeted.”
The Political Question
Whether the White House considers a former career FDA official—particularly one who left because of the previous commissioner—is an open question. Pazdur is not aligned with the MAHA agenda. He is a scientist and regulator, not a political appointee. His nomination would signal that the administration prioritizes institutional stability and industry confidence at the FDA. His absence from the candidate list would signal that political alignment remains the dominant criterion.
Kennedy said the search for a new commissioner is “already underway” and will proceed “with urgency.” Stephen Hahn and Brett Giroir remain the previously reported potential nominees. Pazdur is now the industry’s preferred candidate.
Two Gene Therapy Safety Signals in One Week
Two concerning gene therapy safety stories emerged this week, creating an overhang on one of the most promising modalities in medicine.
REGENXBIO Duchenne Gene Therapy Side Effects
REGENXBIO shares slumped after the company reported serious side effects in its gene therapy trial for Duchenne muscular dystrophy. The specific details of the adverse events were not immediately disclosed, but the market reaction signals significant investor concern about the program’s viability. Duchenne is a devastating genetic disease that primarily affects boys, and gene therapy has been viewed as one of the most promising therapeutic approaches for the condition.
Brain Tumor Linked to AAV Vector
STAT News reported that scientists linked a boy’s brain tumor to the adeno-associated virus (AAV) delivery system used in a gene therapy treatment. The finding underscores a theoretical cancer risk—insertional oncogenesis—that the gene therapy field has debated for years but rarely seen confirmed in clinical practice. Insertional oncogenesis occurs when the viral vector used to deliver therapeutic genetic material integrates into the patient’s genome in a location that disrupts tumor suppressor genes or activates oncogenes, potentially triggering cancer.
The authors noted that the risk still must be weighed against the potentially life-changing benefits of gene therapy. For patients with severe genetic diseases that have no effective treatments, the risk-benefit calculus may still favor gene therapy even with a low but non-zero cancer risk.
What This Means for the Field
These two events will intensify regulatory scrutiny of gene therapy safety, particularly for AAV-based approaches which are the dominant delivery vector in the field. AAV-based therapies include some of the most high-profile gene therapy products on the market and in development. The question the field now faces is whether the safety monitoring requirements for gene therapy trials need to be updated to include longer-term cancer surveillance.
The FDA, now operating without a permanent commissioner, will need to decide how to respond. Updated guidance, advisory committee discussions, or modified clinical hold requirements are all possible. The timing is unfortunate: a safety question of this magnitude requires the kind of clear, decisive regulatory leadership that the agency currently lacks.
Patent Cliff Watch: Eliquis Faces 98.6% Revenue Collapse by 2031
The Pharma Letter reported that BMS’s Eliquis (apixaban) is “on course for one of the largest single-asset revenue collapses in pharmaceutical history,” projecting a 98.6% decline in global revenue by 2031 as patent protection expires. Eliquis generated more than $20 billion in combined revenue for BMS and Pfizer (co-marketer) in recent years.
Why This Matters: The Eliquis projection underscores the scale of the patent cliff facing large pharma. A single drug going from $20 billion in annual revenue to near-zero in five years creates a revenue hole that no pipeline can easily fill. This is exactly the kind of structural pressure that has driven BMS to execute the $15.2 billion Hengrui deal (13 programs), Lilly to deploy $20 billion across six acquisitions, and the broader industry to pursue M&A at a pace that could reach $250 billion this year. The patent cliff is not an abstract future risk. It is an active, quantifiable force reshaping the industry’s capital allocation in real time.
Biogen Advances Tau Alzheimer’s Drug to Phase 3 Despite Phase 2 Miss
Biogen announced it will advance diranersen (BIIB080), a tau-targeting antisense oligonucleotide, into Phase 3 trials for early Alzheimer’s disease despite the Phase 2 CELIA study missing its primary endpoint. BioSpace described the decision as prompting “cautious optimism.” The company cited signals in secondary endpoints and biomarker data as justification.
Why This Matters: Advancing a program after a Phase 2 miss is a high-conviction bet. Tau-targeting therapies have been one of the most elusive goals in Alzheimer’s research. The amyloid hypothesis dominated for decades, and the recent approval of amyloid-targeting antibodies (Leqembi, Kisunla) validated that approach. Tau represents a complementary mechanism. If Biogen’s Phase 3 data show meaningful tau reduction correlating with clinical benefit, it would open an entirely new therapeutic axis in Alzheimer’s. If the Phase 3 confirms the Phase 2 miss, Biogen will have invested significant capital in a program that the Phase 2 data suggested would not work.
Strategic Themes
1. The Iran War’s Supply Chain Impact Is Now a Pharma Story, Not Just a Geopolitical Story
Evonik’s 15% price increase moves the supply chain disruption from abstract geopolitical risk to concrete financial impact. Every pharmaceutical company that sources raw materials, APIs, or finished products through supply chains that touch the Middle East or India-to-West corridors is affected. Generic manufacturers are most immediately vulnerable because their margins cannot absorb sustained cost increases. But branded pharma is not immune: clinical trial disruptions, API cost increases, and shipping delays affect the entire industry.
2. The Pazdur Candidacy Would Signal Whether the White House Prioritizes Science or Politics at the FDA
Pazdur is the industry’s preferred candidate because he represents institutional expertise, regulatory credibility, and scientific rigor. He is not a political appointee and is not aligned with the MAHA agenda. His nomination would signal that the administration values FDA institutional stability above political alignment. His absence from the candidate list would signal the opposite. The outcome will define the FDA’s direction for the remainder of this administration.
3. Gene Therapy Safety Will Sharpen Regulatory Scrutiny at the Worst Possible Time
The AAV-linked brain tumor and the REGENXBIO Duchenne adverse events arrive at a moment when the FDA has no permanent commissioner, both CDER divisions are led by acting directors, and institutional morale is low. Safety signals of this magnitude in a transformative therapeutic modality require clear regulatory leadership. The response—whether it takes the form of updated guidance, advisory committee review, or modified monitoring requirements—will be shaped by whoever is leading the agency during a period of exceptional institutional vulnerability.
4. The Eliquis Projection Makes the M&A Math Unavoidable
98.6% revenue decline by 2031 on a $20 billion-plus franchise. No pipeline can replace that organically on a five-year timeline. M&A is not optional for BMS—it is the only path to maintaining revenue stability. The Hengrui deal (13 programs, $15.2 billion) is the direct response. For every other company facing a similar cliff—and the industry has multiple franchises in the tens of billions facing patent expiration this decade—the Eliquis projection is a preview of the financial mathematics that will drive deal-making for years.
Frequently Asked Questions
How is the Iran war affecting pharma supply chains?
Evonik raised prices 15% on pharma inputs. Strait of Hormuz shipping is 90% below pre-war levels. Indian API exports are being rerouted at up to 350% higher air cargo costs. Generic drug margins are under severe pressure. The USP warned that petroleum-derived inputs essential to API production are affected by rising energy prices. 6.7% of global clinical trials have been impacted.
Why is India so important to U.S. drug supply?
India supplies approximately 18% of all API facilities serving the U.S. and produces upwards of 35% of total U.S. API supply. It is the world’s largest producer of generic medicines. Many Indian exports historically transit through Gulf air hubs that have been disrupted by the war.
Who is Pazdur, and why do biotech leaders want him as commissioner?
Dr. Richard Pazdur led the FDA’s Oncology Center of Excellence for more than a decade and is widely respected for accelerated approval innovations. He left the FDA earlier this year, citing Makary’s leadership. Biotech executives sent a letter recommending him to President Trump. He represents institutional continuity and scientific rigor.
What are the gene therapy safety signals?
REGENXBIO reported serious side effects in its Duchenne muscular dystrophy gene therapy trial (shares slumped). Separately, STAT reported that scientists linked a boy’s brain tumor to the AAV delivery system used in a gene therapy, confirming a theoretical cancer risk (insertional oncogenesis) that the field has long debated.
What does the Eliquis projection mean?
The Pharma Letter projects Eliquis will lose 98.6% of global revenue by 2031 as patents expire. The drug generated over $20 billion annually for BMS and Pfizer. This underscores the patent cliff pressure driving the M&A wave across pharma.
Is the U.S. at risk of drug shortages from the Iran war?
The White House ordered a six-month stockpile of 26 essential medicines in mid-2025, providing a temporary buffer. But the stockpile covers only 26 products and is being drawn down. If the conflict persists, shortages could emerge in Q3 or Q4 for products not in the stockpile. The UK is already expecting shortages within weeks.
What is Biogen doing with diranersen?
Advancing the tau-targeting Alzheimer’s drug into Phase 3 despite the Phase 2 CELIA study missing its primary endpoint. Biogen cited secondary endpoint signals and biomarker data. This is a high-stakes bet on the tau hypothesis as a complement to amyloid-targeting therapies.
When is ASCO?
May 29 through June 2 in Chicago. Revolution Medicines plenary session May 31. The conference is 16 days away.
BioMed Nexus Pro — What Institutional Subscribers Are Reading Today
Supply Chain Deep Dive. We analyze how the Iran war is compressing generic margins, which product categories are most vulnerable to shortage, why the U.S. six-month buffer is finite and covers only 26 products, and how Section 232 domestic manufacturing incentives take on new strategic urgency in a Strait of Hormuz closure scenario.
Gene Therapy Safety. We assess what the AAV-linked brain tumor case and REGENXBIO Duchenne adverse events mean for the field, which companies and programs are most exposed to heightened regulatory scrutiny, and how the FDA leadership vacuum complicates the agency’s response.
Patent Cliff Tracker. We compile the Eliquis 98.6% projection alongside other major franchise erosions into a unified tracker showing the combined tens of billions in revenue at risk this decade and how each affected company is responding through M&A, pipeline investment, and licensing.
Plus: Pazdur candidacy assessment, Biogen tau Alzheimer’s Phase 3 risk analysis, ASCO 16-day countdown, and the updated catalyst calendar through H2 2026.
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