Middle East War Raises Risks for South Korea’s $1B Pharma-Biotech Export Market

As the Middle East is shaken by war between the United States and Iran, South Korea’s pharmaceutical and biotech industry is bracing for fallout in what it calls a 1 trillion won export market. The region has been a strategic growth hub for high-margin products such as biosimilars and botulinum toxin, and companies with heavier exposure are watching for a threefold hit: shipment disruptions, delayed payments and rising costs.

According to foreign media reports and industry officials on the 23rd, the war — sparked by U.S. and Israeli airstrikes — is showing signs of dragging on, putting Korean drugmakers and biotech firms on heightened alert. Companies have expanded exports to the Middle East across pharmaceuticals, medical devices and aesthetic and cosmetic medical products.

The Korea Health Industry Development Institute said South Korea’s biohealth exports to the Middle East totaled $1.03 billion (about 1.55 trillion won) last year, the highest on record.

Growth has been led by so-called K-beauty and medical products, including biosimilars, botulinum toxin and hyaluronic acid fillers. Daewoong Pharmaceutical entered the Middle East and North Africa, or MENA, starting with the United Arab Emirates in 2020 with its botulinum toxin product Nabota, and later expanded to Saudi Arabia and Qatar. Hugel has increased supplies of Botulax using the UAE and Kuwait as hubs. Medytox’s Neuramis filler and Hanmi Pharmaceutical’s Rolontis have also continued exports under supply contracts with local partners.

With the U.S.-Iran conflict taking on the shape of a prolonged fight, conditions on the ground are shifting quickly. Disruptions are expected in parts of the region’s sea and air logistics networks, and tensions are spreading to nearby countries, prompting Korean companies to activate contingency plans. Some medical and pharmaceutical firms with bases in Dubai and elsewhere have moved to remote work and reduced business travel for safety, creating unavoidable gaps in local sales and marketing.

An industry official said companies can still manage the situation through measures such as adjusting shipping schedules or handling delays, but warned that a prolonged conflict would likely cause damage. The official added that, given the common practice among Middle East buyers of taking time to settle payments after shipment, the burden of managing financial risk could grow.

Concerns also extend to global supply chains. South Korea’s pharmaceutical and biotech sector relies heavily on imported active pharmaceutical ingredients, and a Middle East-driven shock, combined with production disruptions elsewhere, could trigger broader supply instability.

Jeong Yun-taek, head of the Korea Pharmaceutical Industry Strategy Research Institute, said South Korea has already experienced the risks of overseas dependence during the COVID-19 pandemic, citing shortages of Tylenol. He said expanding regional risks could disrupt international medicine supply chains. The Ministry of Food and Drug Safety said the domestic self-sufficiency rate for active pharmaceutical ingredients stood at 25.6% as of 2023.

Rising crude oil prices are another concern. If prices climb for basic chemicals such as naphtha, which is essential to synthesizing drug ingredients, manufacturers’ costs can rise directly. A won-dollar exchange rate stuck in the 1,500-won range may help exporters, but it also increases the burden of importing raw materials, raising concerns about negative effects.

The government and industry said they are monitoring developments closely and preparing steps to minimize damage. The Korea Health Industry Development Institute and related ministries are tracking export trends to the Middle East and changes in shipping routes and flights, and are reviewing possible support measures if needed. A pharmaceutical company official said the industry is watching for logistics disruptions and weakening local demand after achieving record-high drug export results last year.