Nordic Life Science 1
THE MIDDLE EAST // INDUSTRY IMPACT Q&A “In Europe
, the conflict is primarily reducing financial flexibility” T E X T B Y MA L I N O T MA N I NLS asked Azza Chammem, Associate Director at Scope Ratings, a European credit rating agency, how the current conflict in the Middle East has affected the life science industry and what the future effects might be. What effects have you seen when it comes to the European life science industry? “In Europe, the conflict is primarily reducing financial flexibility rather than disrupting production. Pharma, biotech, and medtech manufacturing continues, but higher freight, energy and input costs are squeezing profit margins. Europe is particularly exposed because it remains structurally dependent on imported APIs, chemical intermediates, and specialized components, the transport of which depends on shipping and air freight disrupted by the conflict in the Middle East. As transport routes lengthen, logistics costs and working capital rise.” “A practical example is European biologics or insulin manufacturers facing higher cold-chain costs and greater operational risk, while pricing and reimbursement frameworks offer limited scope to pass these costs on quickly. As a result, cost shocks have a rapid impact in reducing profitability.” W HAT PARTS of the life science sector are most affected by the Middle East conflict? “Globally, the most affected segments are those that rely on complex, cross-border supply chains, particularly products that are time-critical or temperature-sensitive. These include biologics, vaccines, oncology treatments, insulin, and GLP-1 therapies, as well as certain high value medical devices that depend on specialized components.” “From a regional perspective, Europe and Asia are more exposed than other regions. Europe is highly dependent on imported APIs and intermediates, while Asia produces a large share of these inputs and relies on uninterrupted export routes. Any disruption to trade through the Strait of Hormuz and other transit corridors in the Middle East therefore affects both regions disproportionately.” “In terms of companies, API importers, biotech firms with limited inventory buffers, contract manufacturers, and specialized medtech suppliers are more vulnerable, as they lack the flexibility to adapt to transport delays and higher logistics costs, in contrast to large, diversified life science groups like AstraZeneca, Roche, and Sanofi. For the large European life science groups, the disruption is evident mainly through higher logistics and input costs rather than direct supply disruptions, reflecting their diversified manufacturing bases and operational resilience.” “For patients, the impact is most visible for those relying on time-sensitive or coldchain-dependent treatments, where delays can disrupt treatment schedules, even when medicines remain available generally.” D escribe the potential consequences on Europe’s life science industry if the conflict is prolonged? What kind of companies are most at risk? “If the conflict is prolonged, its impact would become increasingly relevant in terms of credit for parts of the European life science sector. Higher logistics and energy costs would accumulate alongside existing pressures such as loss of exclusivity cycles, rising capital expenditure, and sustained R&D intensity.” “The companies most at risk are smaller pharma and biotech firms, API manufacturers, contract drug developers and manufacturers, and specialized medtech suppliers. These companies tend to operate with slimmer margins, are more exposed to volatile energy costs, and have limited pricing power. In practical terms, NORDICLIFESCIENCE.ORG | 31 PHOTO PETER HIMSEL