Quality concerns could upset the apple cart for Indian generic-drug makers exporting to the US, even as they look to tap the $96-billion-worth opportunity emerging from drugs going off patent between 2011 and 2013.
Coming at a time when big pharma is forging alliances with Indian generic-drug makers, a quality-related hiccup would not just delay revenues for domestic companies, it could also hurt its brand image for future collaborations, said an industry observer.
Quality issues of varying degrees of seriousness raised by the US Food and Drug Administration have worried a host of Indian companies in the past, be it the erstwhile Ranbaxy, Claris, Sun Pharma or Lupin. And while some have resolved the issues, concerns remain for companies such as Claris Lifesciences, which shot into the limelight with a high-profile alliance with US drug giant Pfizer in mid-2009.
With Ranbaxy, for instance, quality has plagued the company from late 2008, just after it was acquired by Japanese drug-major Daiichi Sankyo in a $4.6-billion deal earlier in the same year.
Though the outlook for Indian companies looks good this year due to continued demand for generic drugs — or chemically-similar versions of original medicines — ratings agency Fitch singles out regulatory concerns and litigation as a key risk.
“Regulatory risks emanating from quality issues will have a significant impact on the earnings visibility of Indian pharmaceutical companies,” Ms Ashwini Picardo, Fitch Ratings' Associate Director, told Business Line . Fitch expects the US market to be the main growth driver for the demand of generics.
It is true that regulatory agencies across the world are getting more vigilant on quality, said Mr D.G. Shah of the Indian Pharmaceutical Alliance. It is a reality for all drug makers and not just Indian generic drug companies. The challenge is for companies to be aware of the constantly changing regulatory framework, he added.