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The world’s biggest condom maker said it would raise the prices of prophylactics, lubricant jelly and catheters by up to 30 per cent due to the knock-on effects of the Middle East war.
Malaysia’s Karex, which makes about a fifth of the world’s condoms, said supply-chain disruption triggered by the closure of the Strait of Hormuz had increased manufacturing costs.
Karex produces more than 5bn condoms a year from its factories in Malaysia and Thailand. Its problems are a stark example of the severe disruption caused to manufacturing plants in Asia — the region hit hardest by the upheaval to energy markets and global trade resulting from the war.
“The situation we are now facing with war in the Middle East is quite sudden and there is not much time for us to prepare,” chief executive Goh Miah Kiat told the FT. “Some of our raw materials are increasing in pricing rather quickly and we have no choice but to transfer some of the cost to our clients.”
Karex supplies products for some of the world’s best-known contraceptive brands including Durex and Trojan. It also has government contracts to supply products to the likes of the UK’s National Health Service.
The closure of the Strait of Hormuz — through which 30 per cent of global seaborne oil passes — has resulted in bottlenecks to global supply chains around the world and led to shortages of products ranging from helium to jet fuel.
Goh said Karex was experiencing higher costs for materials used to make condoms such as latex and nitrile, as well as aluminium foil and silicone oil used for packaging.
Goh said the price of petroleum-based latex had increased by 30 per cent this year, while nitrile butadiene — another synthetic rubber — had doubled. Shipping times were also increasing. “We think the situation will probably linger for quite a bit,” he said.
He added that the impact on consumers would depend on how much additional costs were absorbed by condom brands and retailers.
Karex’s expectations of higher prices were first reported by Reuters.
Founded by the Goh family in Malaysia in 1988, which started in the rubber processing business in the 1960s, Karex initially made Carex-branded condoms for the Singapore and Malaysian markets.
It also makes lubricating jelly, catheters, rubber gloves and covers for probes used in medical examinations. Goh said Karex would probably need to increase prices on all its products.
More than two-thirds of Karex revenues come from producing condoms for other brands, although it also generates income through bulk sales to government-funded HIV/Aids prevention and family planning programmes.
This part of the business suffered last year due to Donald Trump’s closure of the US Agency for International Development, which historically supported large-scale condom distribution initiatives.
