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India’s China Dependence On API: A Time To Think ‘Outside The Box’

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The Department of Pharmaceuticals (DoP) has declared the Year 2015 as the Year of ‘Active Pharmaceutical Ingredient (API)’. Following it up on February 25, 2015, the Union Minister of Chemicals & Fertilizers Ananth Kumar assured the Pharmaceutical Industry that appropriate decisions will be taken soon to make India self-sufficient in Bulk Drugs (APIs).

The Minister also confirmed having received the recommendations of high level ‘Katoch Committee’ that was set up by the Government on October 8, 2013 to look into various issues concerning the API. This would be implemented expeditiously after taking the Union Cabinet’s approval, as the Bulk Drugs constitute the backbone of the Pharma Industry and the sector needs to be incentivized to take on the challenges from cheaper imports.

According to a recent report, in June 2015, the Ministry of Chemicals and Fertilizer has floated a draft cabinet note with the recommendations of the ‘Katoch Committee’. Quoting a senior official of the DoP the report mentioned that the cabinet note also proposes formation of a separate bulk drug authority, which will look into the implementation of such schemes.

The DoP Secretary Dr. V.K. Subburaj has lately reiterated that there is an urgent need to bring about self-sufficiency in the field of API.

In this article, I shall restrict my discussion only to those APIs, which are required for manufacturing the essential medicines in India.

Significant dependence on China:

For a large number of essential medicines, India heavily depends on API imports from China.

On December 12, 2014, the Minister of Commerce and Industry informed the Indian Parliament that in case of 12 essential drugs namely: Paracetamol, Metformin, Ranitidine, Amoxicillin, Ciprofloxacin, Cefixime, Acetyl salicylic acid, Ascorbic acid, Ofloxacin, Ibuprofen, Metronidazole and Ampicillin, there is significant dependence on imports. Approximately 80-90 percent of these imports are from China. He mentioned that the decision to import, and the country of origin for such imports, are based on economic considerations.

The Minister also informed the Parliament that a Committee of Secretaries, under the Chairmanship of the Secretary, Department of Health Research was set up on October 8, 2013 to study and identify the APIs of critical importance and to work out a package of interventions/concessions required to build domestic production capabilities, and examine the cost implication.

Interestingly, rapid and consistent increase in API import from China has been reported as follows:

Year API import from China (Rs. Crore)
April-September in 2014-15 6,521
2013-14 11,865
2012-13 11,000
2011-12 8,798

Ironically, though India manufactures over 30 percent of global generic drug consumption, more than 80 percent of APIs required to produce these medicines come from China.

In ‘RIS Policy Brief’ February 2015, Dr. Y. K. Hamied, Chairman of CIPLA was also quoted sounding an alarm bell, as follows:

“If China decided one bright day to stop export to India, we would be finished. The pharma industry is zero, both domestic and export, and we are looking at that danger objectively”.

Even, the National Security Adviser of India has reportedly expressed similar concern and urged to create adequate infrastructural facilities to make India self-reliant, at least, on the essential medicines, without further delay.

Another recent industry report:

A July 2014 report of ASSOCHAM, titled “Pharmaceuticals Sector in India: Challenges Faced & Suggested Way Forward” also underscores, since a very significant volume of India’s drug imports are concentrated in China, this lack of self–sufficiency in APIs poses significant risk to the drug security of the country. Any deterioration in relationships with China can potentially cause severe domestic shortages in the supply of essential drugs. 

Additionally, China could easily increase prices of some of these drugs where it enjoys virtual monopoly, noted the ASSOCHAM study.

The report further points out that this risk extends beyond the domestic market to export markets, as Chinese pharmaceutical companies, that have traditionally focused on large-volume intermediates and unregulated markets are beginning to “forward integrate”, with increasing focus on exports to regulated markets.

This emerging trend is supported by the recent improvements in local Chinese cGMP and product quality standards, increase in the number of manufacturing sites approved by the USFDA, and current filings of Abbreviated New Drug Applications (ANDAs) by the local companies of China. Given their overall dominance in intermediates and API manufacturing, Chinese players can pose a serious competitive threat to their Indian counterparts, much beyond the APIs for essential drugs, the above study noted.

‘Katoch Committee’ recommendations:

The recommendations of the ‘Katoch Committee’, as revealed by the the Minister to the law makers of India, appears to me a long list of ‘Things to Do’ without addressing the intricacies involved with the complicated core issue.

On May 8, 2015, the Minister of State of the Ministry of Chemicals and Fertilizers informed the Rajya Sabha of the Indian Parliament that in its report on API manufacturing in India, the Katoch Committee has inter-alia recommended:

  • Establishment of Mega Parks for APIs with common facilities such as common Effluent Treatment Plants (ETPs), Testing facilities, Captive Power Plants/assured power supply by state systems, Common Utilities/Services such as storage, testing laboratories, IPR management, designing, etc., maintained by a separate Special Purpose Vehicles (SPV)
  • A scheme for extending financial assistance to states to acquire land and also for setting up common facilities
  • Revival of public sector units for starting the manufacturing of selected and very essential critical drugs (e.g., penicillins, paracetamol etc.)
  • Financial investment from the Government for development of clusters which may be in the form of a professionally managed dedicated equity fund for the promotion of manufacture of APIs
  • Extending fiscal benefits to creation of the entire community cluster infrastructure and individual unit infrastructure
  • Extension of fiscal and financial benefits to promote the bulk drugs sector
  • Promoting stronger industry-academia interaction
  • Synergizing R&D promotion efforts by various government agencies
  • Incentivizing scientists
  • Duty exemptions for capital goods imports

On the face of it, the recommendations appear to be good. However, are these not too simplistic, based on just what is visible on the surface, without going into the complexity of the issue?

I shall now briefly dwell upon some of these areas, from my own perspective of the core issue and the key challenges involved.

Major challenges:

Profitability is undoubtedly a major reason why the indigenous production of important APIs, required to formulate widely used essential medicines, has paved the way for low priced Chinese equivalents. This has been acknowledged by all concerned and has happened more with APIs involving fermentation technology.

Besides other factors, API profitability and commensurate return on capital employed (RoCE) are primarily driven by the product design, process technology in use together with its associated requirements, cost of capital goods and utilities, working capital requirement, quality of sustainable demand generated and achievement of ‘economies of scale’. The last one is so important, as it signifies that proportionate saving in costs is gained by an increased level of production. Simply speaking, the greater the yield and the quantity of a API produced, the lower will be the per-unit fixed cost, as these costs are shared over a larger number of goods.

Additionally, ‘any time cGMP-audit preparedness’ for the big customers, make the running of the operation really unenviable.

Highly competitive generic API market, with larger number of manufacturers, is driven by its customers’ requirement of the lowest possibly cost for any quality product. With this ascending trend, global API manufacturing business has started slowly shifting from the long time much preferred big-name players of the western world, to the upcoming ones in India and China. Unfortunately, now even India has started importing APIs in significant volume from China. APIs of Chinese origin for Indian essential drugs are not just cheaper, but are also available almost on the shelf.

This fiercely competitive scenario has compelled a sizeable number of bulk drug manufacturers to shut shops in India. Many other ‘API only’ Indian manufacturers are now venturing into production and marketing of higher margin formulations, moving up the pharma value chain.

Some API producers have also entered into contract manufacturing of formulations in large quantities. A few others have already entered or are trying to enter into their API based formulation manufacturing agreements with large pharma MNCs for the regulated markets, and by filing DMFs and ANDAs.

To sum up, the challenges before the API sector, in my view, are predominantly as follows:

  • Intense price competition
  • Requirement of attaining ‘economies of scale’ for business sustainability, at times leading to overcapacity
  • Low profitability and RoCE
  • ‘Any time technical audit’ preparedness for high-end customers
  • Capital intensive business
  • High inventory carrying cost both for intermediates and finished goods
  • Long credit demand
  • High working capital requirement
  • Undifferentiated capabilities
  • Product obsolescence with changing disease profile or newer off-patent molecules coming in the same therapy area

Need to think ‘outside the box’:

I do not have access to the complete report of the Katoch Committee, just yet. However, going by what the Government has reported to the Indian Parliament on this subject, it appears that overall recommendations made by the Committee of Secretaries on the subject, are steps in the right direction.

If all the suggestions are implemented, the cost of manufacturing infrastructure and utilities are expected to come down. However, I am not quite sure, whether just these steps would be good enough making India self-reliant on APIs required to manufacture the essential medicines.

Nevertheless, to achieve the desired goal, some critical questions would still need to be answered with high clarity, such as:

  • Despite lowering cost of manufacturing, would it still be enough to neutralize Chinese competition?
  • Stakes being very high for China, if it feels threatened of loosing the booming API generic business from India, won’t the Chinese Government not find out ways and means to retain its ground? If so, are there proactive measures ready to negate the possible counter-move by China?
  • Would this cost reduction help most of the Indian API manufacturers achieving ‘economies of scale’ for reasonable sustainability, with cost competitiveness in the business?
  • Most of the essential drugs are low cost products. Thus, what happens, if Indian API manufacturers in clusters, thus created, decide to produce and sell only higher margin APIs and intermediates, including for the global innovator companies, without getting engaged in APIs for essential medicines?

Since this crucial problem is multi-faceted one, the recommendations should address all possible ‘what if’ scenarios, thinking ‘outside the box’. Mere creation of infrastructural and financial support base, may not help addressing all the key challenges, effectively. After all, it’s an open market competition, and Chinese players are tough nuts to crack, as they have been demonstrating time and again in various fields of activities.

Conclusion:

Having achieved dominance in the Indian generic API market, Chinese bulk drug manufacturers are now concentrating on continuous improvement in process technology to drive down the cost further. According to available reports, they are achieving it too, with great success, focusing on multiple critical areas starting from product and reactor design to much wider use of catalysis.

To effectively compete with Chinese APIs, especially for essential drugs, Indian API manufacturers in the clusters would require to start, at least, from where China is today in this area, and take off from there. This is possible, though quite challenging too.

Moreover, manufacturing overcapacity for generic APIs is already existing in China. If it gets further aggravated with overcapacity created in India for the same molecule, the overall scenario may lead to a desperate sales and marketing situation of survival for the fittest.

No doubt, over-dependence on Chinese APIs for the essential medicines may pose a threat to the drug security of India, as many have already opined, including the National Security Advisor of the country. Nonetheless, the situation could possibly turn even worse, without imposition of artificial tariff barrier, if India decides to rely on a simplistic solution for a multi-factorial complex problem.

‘Katoch Committee’ report is a good initiative for the domestic API business, in general. Nonetheless, to significantly reduce over-dependence on imported Chinese bulk drugs and be self reliant on  high quality and competitively priced APIs for essential medicines, India would need to think ‘outside the box’, undoubtedly.

By: Tapan J. Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

Booming Sales Of Unapproved Drugs: Do We Need “Safe In India” Campaign For Medicines?

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“To sin by silence when they should protest makes cowards of men”                      - Abraham Lincoln

Not just the Federal Drug Administration of the United States (USFDA), global concerns are being expressed regularly about the laxity of drug regulatory and clinical trial standards in India, exposing patients to health safety related risks.

The problem is significantly more with the Fixed Dose Combination (FDC) Drugs for various reasons. This is worrisome because; the domestic market for FDCs is very large and growing much faster, in sharp contrast to the western world. For example, in 2011-12 FDCs accounted for more than half of all NSAID and oral anti-diabetic drug sales, and one-third and one-fifth of anti-psychotic and anti-depressant/benzodiazepine sales, respectively, according to a recent study.  Both the domestic and multi-national pharma players market FDCs in India

Alarmingly, a plethora of FDCs unapproved by the drug regulators of India on their rationality, efficacy and safety, have flooded the domestic pharma market, in large quantities.

All such drugs are being actively promoted by the respective pharma players, widely prescribed by the doctors, openly sold by the chemists and freely consumed by the patients without any apprehension or having no inkling of the magnitude of the possible health hazards that such drugs might cause, both in short and long term.

Public health safety hazard arising out of this scenario does not seem to have ever been estimated by the Indian drug regulators, despite indictments even by the Parliamentary Standing Committee, nor is there any properly functional system in place to capture such data for meaningful analysis.

As the saying goes ‘better late than never’, a credible report on this menace has just been published on May 12, 2015 by independent experts, which I shall discuss in this article.

Is the situation out of control?

On the ground, the situation seems to be out of control of even the Central Drugs Standard Control Organization (CDSCO).

This is vindicated by a March 2013, written reply of the Minister for Health and Family Welfare, where the Government reportedly informed the Lok Sabha (the lower House of the Parliament) that in twenty three cases of new FDC, licenses have been granted by the State Licensing Authorities (SLAs) without the mandatory approval of the DCGI and action will be taken in all these cases.

However, no one seems to know, as yet, what action the Government has taken against those errant officials.

The latest investigative report on the criticality of the situation:

The May 12, 2015 issue of “PLOS Medicine” – a Peer-Reviewed Open-Access Journal, published the results of an investigation on CDSCO approval for and availability of oral FDC drugs in India from four therapeutic areas – analgesia (non-steroidal anti-inflammatory drugs (NSAIDs), diabetes (metformin), depression/anxiety (anti-depressants/benzodiazepines), and psychosis (anti-psychotics).

This study was done based on the Department Related Parliamentary Committee on Health and Family Welfare’s 2012 Report, stating that manufacturing licenses for large numbers of FDCs had been issued by state authorities without prior approval of the CDSCO in violation of rules, and considered that some ambiguity until 1 May 2002 about states’ powers might have contributed to this worrying consequences.

I shall also discuss the above Parliamentary Committee report in this article.

Booming sales of unapproved drugs: 

‘PLOS Medicine’ report highlighted the following:

A. They obtained information on FDC formulations approved between1961 and 2013 in each therapeutic area from the CDSCO.

B. FDC sales details were obtained for the period 2007 to 2012 from PharmaTrac database of drug sales in India. Over the five years included in the time-trend analysis, FDCs accounted for an increasing proportion of total sales volumes. By 2011–2012, FDCs accounted for more than half of all NSAID and oral anti-diabetic drug sales, and one-third and one-fifth of anti-psychotic and anti-depressant/benzodiazepine sales, respectively.

C. Of the 175 FDC formulations marketed in India in the therapeutic areas studied, only 60 (34 percent) were approved. 

Out of these, percentages of approved formulations are as follows:

-       80 percent of 25 marketed metformin FDC formulations

-       27 percent of 124 NSAID FDC formulations

-       19 percent of 16 anti-depressant/benzodiazepine FDC formulations

-       30 percent of 10 anti-psychotic FDC formulations

D. In 2011–2012, percentages of FDC sales volumes arising from unapproved formulations was:

-       43 percent for anti-psychotics

-       69 percent for anti-depressants/benzodiazepines

-       28 percent for NSAIDs

-       0.4 percent for metformin

E. Formulations including drugs of which use is banned or restricted internationally accounted for 13.6 percent and 53 percent of NSAID and anti-psychotic FDC sales, respectively.

F. While “ambiguity” in the rules prior to 2002 was advanced as a reason for some FDCs having been marketed without a record of central approval, the researchers identified no ambiguity, and in fact, following an amendment to the rules in May 2002 that extended the requirements on approval applicants, new FDCs continued to be marketed without a record of central approval.

The suggestions:

The ‘PLOS Medicine’ report concluded with the following suggestions:

Unapproved formulations should be banned immediately, prioritizing those withdrawn or banned internationally, and undertaking a review of benefits and risks for patients.

To ensure long-term safety and effectiveness of new medicines marketed in India, as well as transparency of the approval process, amendments in India’s regulatory processes and drug laws are called for. A review should be undertaken of the safety and effectiveness of FDCs currently available in India.

Indian lawmakers too pointed out this embarrassing regulatory laxity:

This saga of drug regulatory laxity in general and for the FDCs in particular, is continuing since quite a while. This is despite the fact that the Department Related Parliamentary Committee on Health and Family Welfare presented its 59th Report of 118 pages in total on the functioning of the Indian Drug Regulator – the Central Drug Standards Control Organization (CDSCO) in both the houses of the Parliament on May 08, 2012.

The report begins with a profound observation:

Medicines apart from their critical role in alleviating human suffering and saving lives have very sensitive and typical dimensions for a variety of reasons. Prescription drugs are the only commodities for which the consumers have no role to play. Nor are they able to make any informed choices, except to buy and consume whatever is prescribed or dispensed to them, because of the following reasons:

  • Drug regulators decide which medicines can be marketed
  • Pharma companies either produce or import drugs that they can profitably sell
  • Doctors decide which drugs and brands to prescribe
  • Consumers are at the mercy of external entities to protect their interests

The ‘Mission Statement’ of CDSCO is ‘Industry Oriented’ and not ‘Patient Focused:

Very interestingly, the lawmakers’ report highlights, citing the following examples, how out of line the ‘Mission Statement’ of CDSCO is, as compared to the same of other countries, by being blatantly industry oriented instead of safeguarding Public Health and Safety interests :

Drug Regulator

The ‘Mission Statement’
1.

CDSCO, India

 Meeting the aspirations…. demands and requirements of the pharmaceutical industry.
2.

USFDA, USA

 Protecting the public health by assuring the safety, efficacy, and security of human and veterinary drugs.
3.

MHRA, UK

 To enhance and safeguard the health of the public by ensuring that medicines and medical devices work, and are acceptably safe.
4.

TGA, Australia

 Safeguarding public health & safety in Australia by regulating Medicines…

Consequently, the Parliamentary Committee took a strong exception for such utter disregard and continued neglect of patients’ interest by the Drug Regulator of India. It recommended immediate amendment of the ‘Mission Statement’ of CDSCO incorporating in very clear terms that the existence of the organization is solely for the purpose of protecting the best interest of patients and their safety. It is needless to say, thereafter it would call for its stringent conformance with high precision.

A scathing remark against CDSCO:

The parliamentary Committee report made the following scathing remarks on CDSCO in its point 2.2:

“The Committee is of the firm opinion that most of the ills besetting the system of drugs regulation in India are mainly due to the skewed priorities and perceptions of CDSCO. For decades together it has been according primacy to the propagation and facilitation of the drugs industry, due to which, unfortunately, the interest of the biggest stakeholder i.e. the consumer has never been ensured.”

Allegation of possible collusion:

The report also deliberates not only on the utter systemic failure of CDSCO along with the DCGI’s office to enforce the drug regulations effectively, but also towards a possible collusion between CDSCO and the pharmaceutical industry to implement a self-serving agenda by hoodwinking the system. This is a very serious allegation, which needs to be thoroughly probed and the findings of which should be made public for everybody’s satisfaction.

The committee, therefore, felt that effective and transparent drug regulation, free from all commercial influences and callous enforcement of rules and laws, are absolutely essential to ensure safety, efficacy and quality of drugs keeping just one objective in mind, i.e., welfare of patients.

Do we need “Safe in India” campaign for drugs?

Do we need a well-hyped “Safe in India” campaign for drugs? Looking around, at least conceptually, the answer is probably ‘yes’…Seriously…I am not joking!

The reason being, despite scathing remarks of the Parliamentary Standing Committee in 2012, apparently no systematic enquiry has been undertaken by the CDSCO to ascertain the reason for continuation and the veracity of this menace, just yet.

A very significant number of unapproved medications still remain undetected by the drug regulators and continue to be abundantly available, frequently prescribed, openly sold and freely consumed by the patients without even an iota of doubt regarding possible health safety hazards that these prescription drugs might cause.

May 2015 ‘PLOS Medicine’ Report helps unraveling the underbelly of the drug regulatory scenario in India, along with its systemic decay, which fails to halt the possible serious health safety hazards that Indian patients are exposed to.

India’s image as an emerging ‘pharmacy of the world’ for cheaper generic drugs has already been dented with a number of ‘import bans’ from the US and UK for flouting the specified drug manufacturing quality standards.

The saga of ‘import bans’ for Indian drugs, together with this critical health safety related menace, probably necessitates an effective launch of a “Safe in India” campaign for medicines, in general, by the Government.

This initiative gains additional importance, as painstakingly developed reputation of the Indian drug exporters, including the largest domestic players, has now been dented. It needs to be revamped, sooner.

I addressed a related issue in my blog post of February 3, 2014, titled “FDA ‘Import Bans: Valuing Drug Supply Chain Security For Patients’ Safety.”

Conclusion:

Effective resolution of this critical issue demands high priority at the highest level of the decision making process of the Government, with commensurate sense of urgency.

Keeping that in mind, would it be a bad idea, if just like “Make in India” campaign of the Prime Minister; “Safe in India” campaign for medicines is also undertaken with equal gusto and monitored by the top echelon of the country’s rejuvenated governance machinery?

This initiative would probably help sending the very contextual ‘shape up or ship out’ signal to the drug regulators, both at the Center and also in the States to erase the prevailing menace for good.

In that process, it would eventually allay the public health safety concern with the ‘Made in India’ drugs, coming out of ‘Make in India’ campaign, not just in the country, but also beyond its shores.

The speed of action in this situation is the essence. Otherwise, the following golden words of wisdom as enunciated by Abraham Lincoln would keep haunting us, till the remedial measures taken by the Government become palpable on the ground:

“To sin by silence when they should protest makes cowards of men”

By: Tapan J. Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

“Make in India…Sell Anywhere in The World”: An Indian Pharma Perspective

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In his Independent Day speech from the ramparts of the Red Fort on August 15, 2014, Indian Prime Minister Modi gave a clarion call to all investors of the world, “Come, make in India”, “Come, manufacture in India”, “Sell in any country of the world, but manufacture here”.

The Prime Minister did not stop there. In his inimitable style, following it through on September 25, 2014 he gave an official status to ‘Make in India’ slogan and launched a global campaign.

“My definition of FDI for the people of India is First Develop India. This is also a responsibility for the people of India,” he further clarified.

An Indian perspective:

If I juxtapose this vision of the Prime Minister in the Indian pharmaceutical industry perspective, one finds that many small, medium and large size local domestic manufacturers are currently manufacturing drugs not just for the domestic market, but are also exporting in large quantities to various countries of the world, including, North America, South America and Europe.

The United States (US) is one of the most critical markets for majority of the Indian drug exporters. This transaction was taking place without any major regulatory hitches since quite some time. Unfortunately, over the last few years, mostly the Federal Drug Administration of the US (USFDA) and the United Kingdom (UK)’s Medicines and Healthcare Products Regulatory Agency (MHRA) have started raising serious doubts on the quality of medicines manufactured in India, making a significant impact on the drug exports of the country.

Most of these quality issues are related to ‘Data Integrity’ in the dug manufacturing and its documentation processes.

The impact:

According to industry data, in 2013-14, Indian drug exports registered the slowest growth in nearly the last 15 years. In this fiscal year, pharma exports of the country with a turnover of US$ 14.84 billion grew at a meager 1.2 percent. Pharmexcil attributed its reason to USFDA related regulatory issues and increasing global competition.

US accounts for about 25 percent of India’s pharma exports and its Federal Drug Administration (USFDA) has been expressing, since quite a while, serious concerns on ‘Data Integrity’ at the agency’s  previously approved production facilities of a large number of Indian pharma players.

The issue is causing not just a serious concern to USFDA and some other overseas drug regulatory agencies, but also posing a huge threat to future growth potential of Indian drug exports.

It is worth noting that Indian government had set an objective, in its strategy document, to register a turnover of US$ 25 billion for pharma exports in 2014-15. In all probability, it would fall far short of this target at the end of this fiscal, predominantly for related reasons.

Why is so much of ‘fuss’ on ‘Data Integrity’?

Broadly speaking, ‘Data Integrity’ in pharmaceutical manufacturing ensures that finished products meet pre-established specifications, such as, for purity, potency, stability and sterility. If data integrity is breached in any manner or in absence of credible data, the product becomes of dubious quality in the eyes of drug regulators.

Manufacturing related ‘Data Integrity’ is usually breached, when data from a database is deliberately or otherwise modified or destroyed or even cooked.

Over the last several years, ‘Data Integrity’ related issues in India are attracting enormous attention of both the USFDA and the MHRA, UK. As a result, concerned pharma manufacturing facilities are receiving Import Alerts/Warning Letters from the respective overseas drug regulators, refusing entry of those medicines mostly in the United States and some in the UK.

Recent warning letters:

Just over a year – from May 2013 to July 2014, around a dozen ‘Warning Letters’ have been sent to the Indian drug manufacturers by the USFDA on ‘Data Integrity’ related issue, as follows:

Recent ‘Warning Letter’ issued to: Date of issue
1. Marck Biosciences Ltd. 08. 07. 2014
2. Apotex Pharmachem India Pvt Ltd. 17. 06. 2014
3. Sun Pharmaceutical Industries 07. 05. 2014
4. Canton Laboratories Private Limited 27. 02. 2014
5. USV Limited 06. 02. 2014
6. Wockhardt Limited 25. 11. 2013
7. Agila Specialties Private Limited 09. 09. 2013
8. Posh Chemicals Private Limited 02. 08. 2013
9. Aarti Drugs Limited 30. 07. 2013
10. Wockhardt Limited 18. 07. 2013
11. Fresenius Kabi Oncology Ltd 01. 07. 2013
12. RPG Life Sciences Limited 28. 05. 2013

(Source: RAPS, 19 August 2014)

Another report states that USFDA has, so far, banned at least 36 manufacturing plants in India from selling products in the US.

Importance of US for Indian generic players:

Generic drugs currently contribute over 80 percent of prescriptions written in the US. Around 40 percent of prescriptions and Over The Counter (OTC) drugs that are sold there, come from India. Almost all of these are cheaper generic versions of patent expired drugs. Hence, India’s commercial stake in this area is indeed mind-boggling.

The ‘Data Integrity’ issue is not restricted to just US or UK:

A report quoting researchers led by Roger Bate, an American Enterprise Institute scholar and funded by the The Legatum Institute and the Humanities Research Council of Canada, concluded that many Indian pharma companies follow double manufacturing standards, as they are sending poor quality drugs to Africa compared to the same pills sold in other countries. This study was based on tests of 1,470 samples produced by 17 Indian drug manufacturers.

Besides India, the researchers took drug samples from pharmacies in Africa and middle-income countries, including China, Russia and Brazil.

According to this paper, the researchers found that 17.5 percent of samples of the tuberculosis therapy rifampicin sold in Africa tested substandard, which means the drug has less than 80 percent of the active ingredient than what it should otherwise. Against this number, in India, 7.8 percent of the medicine sampled was found substandard.

Moreover, Almost 9 percent of samples of the widely used antibiotic ciprofloxacin sold in Africa tested substandard, as compared to 3.3 percent in India.

Thorny issues around golden opportunities:

Much reported breach in manufacturing ‘Data Integrity’ detected at the manufacturing sites in India, are throwing fresh doubts on the efficacy and safety profile of generic/branded generic medicines, in general, produced in the country and more importantly, whether they are putting the patients’ health at risk.

A new analysis by the U.S. National Bureau of Economic Research pointed out some thorny issues related to ‘Data Integrity’ of drugs produced by the Indian pharmaceutical companies, which supply around 40 percent of the generic drugs sold in the United States, as stated above.

The researchers examined nearly 1,500 India-made drug samples, collected from 22 cities and found that “up to 10 percent of some medications contained insufficient levels of the key active ingredients or concentrations so low, in fact, that they would not be effective against the diseases they’re designed to treat.”

The report also highlighted that international regulators detected more than 1,600 errors in 15 drug applications submitted by Ranbaxy. The Bureau Officials commented that these pills were “potentially unsafe and illegal to sell.”

Frequent drug recalls by Indian pharma majors:

The above findings came in tandem with a series of drug recalls made recently by the Indian pharma companies in the US.

Some of the reported recent drug recalls in America, arising out of manufacturing related issues at the facilities of two well-known Indian pharma majors, which are going to merge soon, are as follows:

  • Sun Pharmaceuticals recalled nearly 400,000 bottles of the decongestant cetirizine (Zyrtec) and 251,882 of the antidepressant venlafaxine (Effexor) this May, because the pills failed to dissolve properly. The drugs were distributed by the drug maker’s US subsidiary Caraco Pharmaceutical Laboratories, but were manufactured in India.
  • In the same month – May, Ranbaxy recalled 30,000 packs of the allergy drugs loratadine and pseudo-ephedrine sulphate extended release tablets because of manufacturing defects in packaging.
  • In March, Sun Pharma recalled a batch of a generic diabetes drug bound for the US after an epilepsy drug was found in it. A patient discovered the error after noticing the wrong medication in the drug bottle.
  • Again in March, Ranbaxy recalled nearly 65,000 bottles of the statin drug atorvastatin calcium (Lipitor) after 20-milligram tablets were found in sealed bottles marked 10-milligrams. A pharmacist in the U.S. discovered the mix up.

Indian media reinforces the point:

Indian media (TNN) also reported that there is no quality control even for life-saving generic drugs and the government is apathetic on ensuring that the quality protocol of these drugs is properly observed.

This happens, as the report states, despite government’s efforts to push generic drugs, as they are more affordable. The report gave an example of a life-saving drug, Liposomal Amphotericin B, which is used to treat fungal infections in critically ill patients.

Are all these drugs safe enough for Indian Patients?

Though sounds awkward, it is a fact that India is a country where ‘export quality’ attracts a premium. Unintentionally though, with this attitude, we indirectly accept that Indian product quality for domestic consumption is not as good.

Unfortunately, in the recent years, increasing number of even ‘export quality’ drug manufacturing units in India are being seriously questioned, warned and banned by the overseas drug regulators, such as USFDA and MHRA, UK, just to ensure dug safety for the patients in their respective countries.

Taking all these into consideration, and noting increasing instances of blatant violations of cGMP standards and ‘Data Integrity’ requirements for ‘export quality’ drugs, one perhaps would shudder to think, what could possibly be the level of conformance to cGMP for the drugs manufactured solely for the consumption of local patients in India.

A cause of concern, as generic drugs are more cost effective to patients:

It has been widely recognized globally that the use of generic drugs significantly reduces out-of-pocket expenditure of the patients and also payers’ spending.

The findings of a study conducted by the Researchers from Brigham and Women’s Hospital (BWH), Harvard Medical School and CVS Health has just been published in the Annals of Internal Medicine on September 15, 2014. In this study the researchers investigated whether the use of generic versus brand name statins can play a role in medication adherence and whether or not this leads to improved health outcomes. The study concluded that patients taking generic statins were more likely to adhere to their medication and also had a significantly lower rate of cardiovascular events and death.

In this study, the mean co-payment for the generic statin was US$10, as against US$48 for brand-name statins. It is generally expected that the generic drugs would be of high quality, besides being affordable.

I deliberated on a related subject in one of my earlier blog posts of November 11, 2013 titled, “USFDA” Import Bans’: The Malady Calls For Strong Bitter Pills”.

Conclusion:

According to USFDA data, from 2013 onwards, about 20 drug manufacturing facilities across India attracted ‘Import Alerts’ as against seven from China, two each from Australian, Canadian and Japanese units and one each from South African and German facilities.

Unfortunately, despite intense local and global furore on this subject, Indian drug regulators at the Central Drugs Standard Control Organization (CDSCO), very strangely, do not seem to be much concerned on the ‘Data Integrity’ issue, at least, not just yet.

In my view, ‘Data Integrity’ issues are mostly not related to any technical or other knowledge deficiency. From the “Warning Letters” of the USFDA to respective Indian companies, it appears that these breaches are predominantly caused by falsification or doctoring of critical data. Thus, it basically boils down to a mindset issue, which possibly pans across the Indian pharma industry, irrespective of size of operations of a company.

Indian Prime Minister’s passionate appeal aimed at all investors, including from India, to “Make in India” and “Sell Anywhere in The World”, extends to pharma industry too, both local and global. The drug makers also seem to be aware of it, but the ghost keeps haunting unabated, signaling that the core mindset has remained unchanged despite periodic lip service and public utterances for corrective measures by a number of head honchos.

Any attempt to trivialize this situation, I reckon, could meet with grave consequences, jeopardizing the thriving pharma exports business of India, and in that process would betray the Prime Ministers grand vision for the country that he epitomized with, “Make in India” and “Sell Anywhere in The World”.

By: Tapan J. Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

FDA ‘Import Bans’: Valuing Drug Supply Chain Security for Patients’ Safety

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To strengthen patients’ health and safety requirements, there is a growing need to first work out and then maintain a robust Drug Supply Chain Security (DSCS) mechanism by the pharmaceutical product manufacturers located anywhere in the world.

It is, therefore, often believed that the broader objective of cGMP encompasses DSCS for the same reason.

Over a period of time DSCS has assumed enormous complexity, as it often extends beyond the geographical territory of a country, spanning across a large number of vendors and vendors’ vendors of different kinds.

A robust DSCS, besides many others, would be able to address effectively, including sourcing of finished goods from third party manufacturers, the following:

  • Health and safety concerns of patients
  • Fraudulent activities leading to drug counterfeiting
  • Stringent global regulatory scrutiny
  • Check on sourcing of unapproved or substandard material

Most common threats to DSCS:

Counterfeit goods are most common threats to DSCS mechanism of any company. According to a report of the World Health Organization (WHO) on the types of counterfeits and their magnitude, such products can be grouped into six categories:

  • Products without active ingredients: 32.1 percent
  • Products with incorrect quantities of active ingredients: 20 percent
  • Products with wrong ingredients: 21.4 percent
  • Products with correct quantities of active ingredients but with fake packaging: 15.6 percent
  • Copies of an original product: 1 percent
  • Products with high levels of impurities and contaminants: 8.5 percent.

Globalization enhances the need of DSCS:

In today’s globalized business environment, the dual need to reducing costs significantly and in tandem minimizing the risks associated with the procurement activities of the business, have compelled many pharma companies to extend their ‘Supply Chain’ related activities spreading across different parts of the globe, instead of just confining to the local space.

At the same time, a new trend is evolving with the emergence of world class outsourcing service providers in the Contract Research And Manufacturing Services (CRAMS) space, especially from the countries like India and China.

Though cost arbitrage both in India and China is a key-motivating factor, the outsourcing services encompass integrated value propositions of high order for the overseas customers, such as, desired quality including cGMP, speed in delivery process and suppliers’ integrity together with overall reliability of end products and services. Nothing in this value chain is mutually exclusive and would be left to chance. More importantly, DSCS  also must go through a set of complex algorithms striking a right balance between all agreed parameters.

Examples of serious DSCS security violations:

Following are a few at random examples of serious DSCS violations globally, at various times in the past:

  • In 1982, seven people in the Chicago area died after ingesting Extra-Strength Tylenol laced with potassium cyanide.
  • In 2007, over 300 people died in Panama of Central America after consuming a cough medication containing diethylene glycol, which was labeled as glycerin. The adulterant diethylene glycol was sourced from China and was relabeled as glycerin by a middleman in Spain, as reported by the media.
  • In March 2008, prompted by around 81 drug related deaths in the United States, the US-FDA announced a large scale recall of Heparin injection, a well-known blood thinner from Baxter Healthcare, suspecting contamination of a raw material sourced from China. Standard technology used by Baxter could not detect the contaminant, which the regulator considered as a deliberate adulteration. The contaminant was eventually identified as an over sulfated derivative of chondroitin sulfate, which costs a fraction of original heparin derivative.

The ‘Heparin tragedy’ raised, possibly for the first time, the need of working out an algorithm to put in place a robust system for DSCS, as stated above. This need has now become more critical as many pharmaceutical players, including those in India, are increasingly outsourcing the API, other ingredients and almost entire logistics from third parties.

The front-runner:

USFDA is globally recognized as the most efficient in this area having a sharp focus on patients’ health and safety interest. However, even a front-runner like this has some manpower related issues to make its global vigilance system almost watertight.  due to In this context, ‘The New York Times’ dated August 15, 2011 reported, despite the fact that US now imports more than 80 percent of APIs and 40 percent of finished drugs mainly from India, China and elsewhere, the agency conducts far fewer foreign inspections as compared to domestic inspections.

The US FDA Commissioner was quoted saying, “Supply chains for many generic drugs often contain dozens of middlemen and are highly susceptible to being infiltrated by falsified drugs.”

In another conference the FDA Commissioner said, “I think people have no idea in this country and around the world about the vulnerability of things that we count on every day and that we have a system that has big gaps in our protective mechanisms.”

Import bans of Indian drugs are related to DSCS:

In India, all may not be fully aware of intense health and safety concerns, as stated above, of the US drug regulator, when reports of repeated ‘import bans’ shake the domestic industry hard. Many even would painstakingly try to invent ‘other reasons’ behind such shameful ‘bans’, which are totally prompted by breach in DSCS going against patients’ interest of the importing country.

Stringent regulatory inspections of Indian manufacturing plants by the US-FDA and UK-MHRA, as reported by the media with great concerns are, therefore, for the same reasons.

The latest in this saga is the Toansa manufacturing facility of Ranbaxy, where USFDA reportedly detected, among others, presence of flies in sample storage room, un-calibrated instruments in its laboratory and non-adherence to sample analysis procedure, prompting yet another ‘import ban’ of drugs made at this facility by the drug regulator of the United States.

Is DSCS in place for all drugs manufactured and consumed in India?

The question therefore floats at the top mind, if for breach of DSCS the drugs manufactured in all those Indian pharma plants, that have faced ‘import bans’ from the US and UK, are unsafe for patients in those countries, how come the medicines manufactured in the same plants for domestic consumption are accepted as safe for the patients in India by the DCGI?

However, the good news is that the DCGI has, at last, taken cognizance of the unfortunate regulatory developments in India and is reportedly planning to initiate a system of sudden inspections of manufacturing facilities of all pharmaceutical players, both domestic and MNCs and would take stringent action against any non-compliance to standards. Let us hope that this is not just a knee-jerk reaction of the Indian drug regulator coming under intense pressure from all corners, the good intent would get translated into reality sooner.

Brinkmanship has failed:

That said, even after witnessing how clumsily the concerned Indian pharma players had prepared themselves for inspections by the overseas drug regulators, many other manufacturers still today continue to take the priority need of DSCS of the importing countries for granted  up until critical situations arise, such as, drug import ban orders by the overseas regulators. The mindset of ‘managing things on the stage’ has not worked. The brinkmanship has miserably failed, repeatedly in so many occasions.

Interestingly, global pharma majors, by and large, have recognized this area as a center piece of their procurement and manufacturing operations and are continuously honing their skills in this domain to avoid any unpleasant surprises on product quality and safety issues leading to loss in business, besides of course quantum damage in reputation and goodwill of the affected companies.

Conclusion: 

Strategic prioritization to maintain DSCS is a relatively a new focus area, which prompts the need to continuously nurturing material suppliers of high reliability and simultaneously explore possibilities of application of newer technologies primarily to avoid any breach in the entire supply chain, right from procurement, manufacturing to end products logistics support.

The process of ensuring a robust DSCS would undoubtedly add to overall cost of operation, especially when the industry is facing a growth challenge in the large developed markets of the world with much higher profit potential.

However, not mitigating the risk of breach in DSCS, could invite a nightmare of unsustainability in the business operations at any given point of time, as has been happening with some pharma majors in India, such as, Ranbaxy and Wockhardt.

Thus, weighing pros and cons, even if this integrated process adds to the cost of business, the option of not going for DSCS system would be foolhardy. At the same time, other operational measures like, improving order fill rate, more efficient inventory management and better buying, could help negating the adverse cost impact significantly.

That said, the bottom-line is: FDA ‘import bans’ are critical manifestations of not valuing, adequately enough,the DSCS for health and safety of patients, not just of the US and UK, but of our homeland too.

By: Tapan J. Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

 

 

Sets 2013, Dawns 2014: Top 7 Pharma Developments

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Wish You Good Health, Happiness, Success and Prosperity in 2014

In this article I shall focus on ‘Top 7 Pharma Developments’, both while ‘Looking Back to 2013′ and also during my ‘Crystal Gazing 2014′.

Looking Back to 2013:

While looking back, the ‘Top 7  Pharma Developments’ unfolded in India during 2013, in my opinion, are as follows:

1. Supreme Court judgment on Glivec: 

The landmark Supreme Court judgment on the Glivec case has vindicated, though much to the dismay of pharma MNCs, the need to strike a right balance between encouraging and protecting innovation, including incremental ones, and the public health interest of India.

2. DPCO 2013:

Following the National Pharmaceutical Pricing Policy (NPPP) of December 2012, the new Drug Price Control Order 2013 (DPCO 2013) signaled a significant departure from the decades old systems of arriving at both the ‘span’ and also the ‘methodology’ of drug price control in India. However, its implementation has been rather tardy as on today.

As a result, at the very beginning of the process of its effective roll-out, the new DPCO faltered badly. It created unprecedented complications and dead-locks not just for the pharmaceutical companies and the trade, but for the National Pharmaceutical Pricing Authority (NPPA), as well, which has not been able to announce the new ceiling prices for at least 100 essential drugs, even 8 months after notification of this order.

The pharma companies and the NGOs have already taken this policy to the court, though for different reasons. The rationale for the National List of Essential Medicines (NLEM) 2011 has also been questioned by many along with a strong demand for its immediate review.

Thus much awaited DPCO 2013 is still charting on a slippery ground.

3. India, China revoked 4 pharma patents:

In the Intellectual Property Rights (IPR) arena many National Governments have now started asserting themselves against the prolonged hegemony of the Western World pressing for most stringent patent regime across the globe, at times even surreptitiously. Such assertions of these countries signal a clear tilt in the balance, favoring patients’ health interest rather than hefty gains in business profits, much to the delight of majority of world population.

Revocation of four drug patents by India and China within a fortnight during July-August 2013 period has thus raised many eyebrows, especially within the pharma Multinational Corporations (MNCs). In this short period, India has revoked three patents and China one.

While these unexpected and rather quick developments are probably double whammy for the pharma MNCs operating in India and China, a future trend would possibly emerge as soon as one is able to connect the evolving dots.

4. Supreme Court intervened in Clinical trials (CT):

With a damning stricture to the Indian Drug Regulator, the Supreme Court, in response to a PIL filed by the NGO Swasthya Adhikar Manch, came out heavily on the way Clinical Trials (CTs) are approved and conducted in the country.

Breaking the nexus decisively between a section of the powerful pharma lobby groups and the drug regulator, as highlighted even in the Parliamentary Committee report, the Ministry of Health, as reported to the Supreme Court, is now in the process of quickly putting in place a robust and transparent CT mechanism in India.

This well thought-out new system, besides ensuring patients’ safety and fair play for all, is expected to have the potential to help reaping a rich economic harvest through creation of a meaningful and vibrant CT industry in India, simultaneously benefitting millions of patients, in the years ahead.

5. US-FDA/UK-MHRA drug import bans: 

Continuous reports from US-FDA and UK-MHRA on fraudulent regulatory acts, lying and falsification of drug quality data, by some otherwise quite capable Indian players, have culminated into several import bans of drugs manufactured in those units. All these incidents have just not invited disgrace to the country in this area, but also prompted other national regulators to assess whether such bans might suggest issues for drugs manufactured for their respective countries, as well.

This despicable mindset of the concerned key players, if remains unleashed, could make Indian Pharma gravitating down, stampeding all hopes of harvesting the incoming bright opportunities.

The ‘Import Alert’ of the USFDA against Mohali plant of Ranbaxy, has already caused inordinate delay in the introduction of a cheaper generic version of Diovan, the blockbuster antihypertensive drug of Novartis AG, after it went off patent. It is worth noting that Ranbaxy had the exclusive right to sell a generic version of Diovan from September 21, 2012.

The outcome of such malpractices may go beyond the drug regulatory areas, affecting even the valuations of concerned Indian pharma companies.

6. Pharma FDI revisited in India: 

After a series of inter-ministerial consultations, the Government of India has maintained 100 percent FDI in pharma brownfield projects through FIPB route. However, removal of the ‘non-compete’ clause in such agreements has made a significant difference in the pharma M&A landscape.

7. ‘No payment for prescriptions’:

Unprecedented acknowledgement and the decision of GSK’s global CEO for not making payments to any doctor, either for participating or speaking in seminars/conferences to influence prescription decision in favor of its brands, would indeed be considered as bold and laudable. This enunciation, if implemented in letter and spirit by all other players of the industry, could trigger a paradigm shift in the prescription demand generation process for pharmaceuticals brands.

Crystal Gazing 2014:

While ‘Crystal Gazing 2014′, once again, the following ‘Top 7 (most likely) Pharma Developments’, besides many brighter growth opportunities, come to the fore:

1. Public Interest Litigation (PIL) now pending before the Supreme Court challenging DPCO 2013 may put the ‘market based pricing’ concept in jeopardy, placing the pharma price control system back to square one.

2. The possibility of revision of NLEM 2011, as many essential drugs and combinations have still remained outside its purview, appears to be imminent. This decision, if taken, would bring other important drugs also under price control.

3. Universal Health Care (UHC) related pilot projects are likely to be implemented pan-India along with ‘free distribution of medicines’ from Government hospitals and health centers in 2014. Along side, more Public Private Partnership (PPP) initiatives may come up in the healthcare space improving access to quality healthcare to more number of patients.

4. With the Supreme Court interventions in response to the pending PILs, more stringent regulatory requirements for CT, Product Marketing approvals, Pricing of Patented Medicines and Ethical Marketing practices may come into force.

5. Possibilities of more number of patent challenges with consequent revocations and grant of several Compulsory Licenses (CL) for exorbitantly priced drugs in life-threatening disease areas like, cancer, loom large. At the same time, between 2013 and 2018, US$ 230 billion of sales would be at risk from patent expirations, offering a great opportunity to the Indian generic players to boost their exports in the developed markets of the world.

6. More consolidation within the pharmaceutical industry may take place with valuation still remaining high.

7. Overall pharma IPR scenario in India is expected to remain as robust and patient friendly as it is today, adding much to the worry of the MNCs and relief to the patients, in addition to the generic industry. More number of countries are expected to align with India in this important area.

Conclusion:

The year 2013, especially for the pharmaceutical industry in India, was indeed eventful. The ‘Top Seven’ that I have picked-up, out of various interesting developments during the year, could in many ways throw-open greater challenges for 2014.

My ‘Crystal Gazing 2014’, would challenge the pharma players to jettison their old and traditional business mindsets, carving out new, time-specific, robust and market savvy strategic models to effectively harvest newer opportunities for growth.

That said, the pharmaceutical industry will continue to thrive in India with gusto, including the MNCs, mainly because of immense potential that the domestic market offers in its every conceivable business verticals, propelled by continuous high growth trend in the domestic consumption of medicines, excepting some minor aberrations.

The New Year 2014, I reckon, would herald yet another interesting paradigm for the pharma industry. A paradigm that would throw open many lucrative opportunities for growth, both global and local, and at the same time keep churning out different sets of rapidly evolving issues, requiring more innovative honed corporate skill-sets for their speedy redressal, as the time keeps ticking.

By: Tapan J. Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

 

USFDA ‘Import Bans’: The Malady Calls For Strong Bitter Pills

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It is a matter of pride that Indian pharmaceutical industry is the second largest exporter of drugs and pharmaceuticals globally, generating revenue of around US$ 13 billion in 2012 with a growth of 30 percent (Source: Pharmexcil).

Though sounds awkward, it is a reality that India is a country where ‘export quality’ attracts a premium. Unintentionally though, with this attitude, we indirectly accept that Indian product quality for domestic consumption is not as good.

‘Export quality’ being questioned seriously:

Unfortunately today, increasing number of even ‘export quality’ drug manufacturing units in India are being seriously questioned by the regulators of mainly United States (US) and the United Kingdom (UK) on the current Good Manufacturing Practices (cGMP) being followed by these companies. In many instances their inspections are culminating into ‘Import Bans’ by the respective countries to ensure dug safety for the patients.

Are drugs for domestic consumption safe?

Despite intense local and global furore on this subject, Indian drug regulators at the Central Drugs Standard Control Organization (CDSCO), very strangely, do not seem to be much concerned on this critical issue, at least, not just yet. Our drug regulators seem to act only when they are specifically directed by the Supreme Court of the country.

A recent major incident is yet another example to vindicate the point. In this case, according to media reports of November 2013, the Drug Controller General of India (DCGI) has ordered the Indian pharma major Sun Pharmaceuticals to suspend clinical research activities at its Mumbai based bio-analytical laboratory, after discovering that the company does not have the requisite approval from the central government for operating the laboratory. The DCGI has decided not to accept future applications and will not process existing new drug filings that Sun Pharma has made from the Mumbai laboratory until the company gets an approval.

Considering the blatant violations of cGMP standards that are increasingly coming to the fore related to ‘export quality’ of drugs in India, after inspections by the foreign drug regulators, one perhaps would shudder to think, what could possibly be the level of conformance to cGMP for the drugs manufactured in India solely for the local patients.

This question comes up as the record of scrutiny on adherence to cGMP by the Indian drug regulators is rather lackadaisical. The fact that no such warnings, as are being issued by the foreign regulators, came from their local counterpart, reinforces this doubt.

USFDA ‘Import Bans’:

Be that as it may, in this article let me deliberate on this particular drug regulatory issue as is being raised by the USFDA and others.

It is important to note that in 2013 till date, USFDA issued ‘Import Alerts/Bans’ against 20 manufacturing facilities of the Indian pharmaceutical exporters, sowing seeds of serious doubts about the overall drug manufacturing standards in India.

The sequence of events post USFDA inspection: 

Let us now very briefly deliberate on the different steps that are usually followed by the USFDA before the outcomes of the inspections culminate into ‘Import Alerts’ or bans.

After inspections, depending on the nature of findings, following steps are usually taken by the USFDA:

  • Issue of ‘Form 483’
  • The ‘Warning letter’
  • ‘Import Alert’

Revisiting the steps: 

Let me now quickly re-visit each of the above action steps of the USFDA.

‘Form 483’: 

At the conclusion of any USFDA inspection, if the inspecting team observes any conditions that in their judgment may constitute violations of the Food, Drug and Cosmetic (FD&C) and other related Acts, a Form 483 is issued to the concerned company, notifying the firm management of objectionable conditions found during inspection.

Companies are encouraged to respond to the Form 483 in writing with their corrective action plan and then implement those corrective measures expeditiously. USFDA considers all these information appropriately and then determines what further action, if any, is appropriate to protect public health in their country.

The ‘Warning Letter’:

The ‘Warning Letter’ is a document usually originating from the Form 483 observations and results from multiple lacking responses to Form 483 requiring quick attention and action. It may be noted that higher-level USFDA agency officials and not the investigator issue the ‘Warning Letters’.

‘Import Alert/ Ban’:

‘Import Alerts’ are issued whenever USFDA determines that it already has sufficient evidence to conclude that concerned products appear to be adulterated, misbranded, or unapproved. As a result, USFDA automatically detains these products at the border, costing the related companies a lot of money. The concerned company’s manufacturing unit remains on the import alert till it complies with USFDA cGMP.

What happens normally?

Most of the USFDA plant inspections are restricted to issue of Form 483 observations and the concerned company’s taking appropriate measures accordingly. However, at times, ‘Warning Letters’ are issued,  which are also mostly addressed by companies to the regulator’s satisfaction.

Import Bans are avoidable: 

Considering the above steps, it is worth noting that there is a significant window of opportunity available to any manufacturing facility to conform to the USFDA requirements by taking appropriate steps, as necessary, unless otherwise the practices are basically fraudulent in nature.

The concern:

Currently, there is a great concern in the country due to increasing frequency of ‘Import Alerts’.  As per USFDA data, in 2013 to date, about 20 drug manufacturing facilities across India attracted ‘Import Alerts’ as against seven from China, two each from Australian, Canadian and Japanese units and one each from South African and German facilities.

The matter assumes greater significance, as India is the second-largest supplier of pharmaceuticals to the United States. In 2012, pharmaceutical exports from India to the US reportedly rose 32 percent to US$ 4.2 billion. Today, India accounts for about 40 percent of generic and Over-The-Counter (OTC) drugs and 10 percent of finished dosages used in the US.

Ranbaxy cases: ‘Lying’ and ‘fraud’ allegations: 

In September 2013, after the latest USFDA action on the Mohali manufacturing facility of Ranbaxy, all three plants in India of the company that are dedicated to the US market have been barred from shipping drugs to the United States. The magnitude of this import ban reportedly impacts more than 40 percent of the company’s sales. However, Ranbaxy has a total of eight production facilities across India.

This ‘Import Alert’ was prompted by the inspection findings of the USFDA that the Mohali factory of Ranbaxy had not met with the cGMP.

Other two plants of Ranbaxy’s located at Dewas and Paonta Sahib faced the same import alerts in 2008, and are still barred from making drug shipments to the US.

The import ban on he Mohali manufacturing facility of Ranbaxy comes after the company pleaded guilty in May 2013 to the felony (criminal) charges in the US related to drug safety and agreed to pay a record US$ 500 million in fines.

In addition, the company also faced federal criminal charges that it sold batches of drugs that were improperly manufactured, stored and tested. Ranbaxy also admitted to lying to the USFDA about how it tested drugs at the above two Indian manufacturing facilities.

Heavy consequential damages with delayed launch of generic Diovan:

The ‘Import Alert’ of the USFDA against Mohali plant of Ranbaxy, has resulted in delayed introduction of a cheaper generic version of Diovan, the blockbuster antihypertensive drug of Novartis AG, after it went off patent.

It is worth noting that Ranbaxy had the exclusive right to sell a generic version of Diovan from September 21, 2012. 

Gain of Novartis:

This delay will help Novartis AG to generate an extra one-year’s sales for Diovan. This is expected to be around US$ 1 billion, only in the US. This development prompted Novartis in July this year to raise its profit and sales forecasts accordingly.

Wockhardt cases: Non-compliance of cGMP

Following Ranbaxy saga, USFDA inspection of Chikalthana plant of Wockhardt in Maharashtra detected major quality violations. Second time this year USFDA noted 16 violations of cGMP in the company’s facility. Earlier, in July 2013, the Agency issued a ‘Warning Letter’ and ‘Import Alert’ banning the products manufactured at the company’s Waluj pharmaceutical production facility.

Moreover, in September 2013, Medicines and Healthcare Products Regulatory Agency (MHRA) had pulled the GMP certificate of the company’s unit based in Nani Daman, after an inspection conducted by the UK regulator showed poor manufacturing standards. 

Again, in October 2013, the MHRA withdrew its cGMP certificate for the Chikalthana plant of Wockhardt. This move would ban import of drugs into the UK, manufactured in this particular plant of the company.

However, MHRA has now decided to issue a restricted certificate, meaning Wockhardt will be able to supply only “critical” products from these facilities. This was reportedly done, as the UK health regulator wants to avert shortage of certain drugs essential for maintaining public health. The impact of the withdrawal of cGMP certificate on existing business of the company can only be ascertained once Wockhardt receives further communications from the MHRA.

Earlier in July 2013, MHRA had reportedly also imposed an import alert on the company’s plant at Waluj in Maharashtra and issued a precautionary recall for sixteen medicines made in this unit.

RPG Life Sciences cases: allegedly ‘Adulterated’ products: 

In June 2013, USFDA reportedly issued a ‘Warning Letter’ to RPG Life Sciences for serious violation of cGMP in their manufacturing plants located at Ankleshwar and Navi Mumbai.

USFDA investigators had mentioned that “These violations cause your Active Pharmaceutical Ingredients (APIs) and drug products to be adulterated …the methods used in, or the facilities or controls used for, their manufacture, processing, packing, or holding do not conform to, or are not operated or administered in conformity with cGMP.”

Strides Arcolab case: Non Compliance of cGMP

In September 2013, Strides Arcolab announced that its sterile injectable drug unit – Agila Specialties (now with Mylan) had received a warning letter from the USFDA after its inspection by the regulator in June 2013. However, Strides Arcolab management said, “the company was committed to work collaboratively and expeditiously with the USFDA to resolve concerns cited in the warning letter in the shortest possible time.”

USV case: allegation of ‘data fudging’: 

Recently, USFDA reportedly accused Mumbai-based drug major USV of fudging the data.

After an inspection of USV’s Mumbai laboratory in June 2013, the US drug regulator said the company’s “drug product test method validation data is falsified”. The USFDA has also reprimanded USV for not training its staff in cGMP.

Probable consequences: 

USFDA import bans and a similar measure by the UKMHRA would lead to the following consequences:

  • Significant revenue losses by the companies involved, till the concerned regulators accept their remedial actions related to cGMP.
  • Increasing global apprehensions about the quality of Indian drugs.
  • Possibility of other foreign drug regulators tightening their belts to be absolutely sure about cGMP followed by the Indian drug manufacturers, making drug exports from India more difficult.
  • Huge opportunity cost for not being able to take advantage from ‘first to launch’ generic versions of off patent blockbuster drugs, such as from Diovan of Novartis AG.
  • Indian patients, including doctors and hospitals, may also become apprehensive about the general quality of drugs made by Indian Pharma Industry, as has already happened in a smaller dimension in the past.
  • Opposition groups of Indian Pharma may use this opportunity to further their vested interests and try to marginalize the Indian drug exporters. 
  • MNCs operating in India could indirectly campaign on such drug quality issues to reap a rich harvest out of the prevailing situation.
  • Unfounded ‘foreign conspiracy theory’ may start gaining ground, prompting the Indian companies moaning much, rather than taking tangible remedial measures on the ground to effectively come out of this self created mess.

Conclusion: 

Repeated cGMP violations made by the Indian drug exporters, as enunciated by the USFDA, have now become a malady, as it were. This can be corrected, only if the reality is accepted without attempting for justifications and then swallowing strong bitter pills, sooner.

Thereafter, the domestic pharma industry, which has globally demonstrated its proven capability of manufacturing quality medicines at affordable prices for a large number of patients around the world and for a long time, will require to tighten belts for strict conformance to cGMP norms, as prescribed by the regulators. This will require great tenacity and unrelenting mindset of the Indian Pharma to tide over the crisis.

Any attempt to trivialize the situation, as indicated above, could meet with grave consequences, jeopardizing the thriving pharma exports business of India.

That said, any fraud or negligence in the drug quality standards, for whatever reasons or wherever these may take place, should be considered as fraud on patients and the perpetrators must be brought to justice forthwith by the DCGI, with exemplary punitive measures.

By: Tapan J. Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.