The lifting of Covid-19 restrictions and the subsequent ease in travel has seen an increase in the pace of US regulatory inspections of pharmaceutical facilities in the US and other geographies, including India. But it’s still to touch pre-pandemic levels, finds a Motilal Oswal Financial Services report, based on data from the US Food and Drug Administration (USFDA).

Despite the review of Abbreviated New Drug Applications (ANDA) having improved during the Covid-19 pandemic, inspections by the USFDA had taken a back seat in the 12-month ending September 2021. Inspections touched a record low of about 2,600 globally and 2,460 in the US.

“From an annual average of 9,500 over 2014-19 (12 months ending September), the number of inspections fell to 4,150 in 2020 and touched a record low of 2,600 in 2021, largely due to COVID-related restrictions,” the report said. However, there has been a sharp pick-up in inspection activity over the past 12-months in the US (5,382), with 70 sites receiving OAI (Official Action Indicated) citations, it added. The US has a dominant share (84 percent) in total USFDA inspections till date.

China, India & Germany

“Since 2009, the USFDA has conducted a total of ~6,850 inspections in China, India, and Germany, constituting 36 percent share of total inspections outside the US,” the report said. And China (while high) was seeing a decreasing trend over the years, compared to India that was continuing to see an upward trajectory,” said Tushar Manudhane, Institutional Research Analyst (Healthcare), at Motilal Oswal Financial Services. With data being across segments from Active Pharmaceutical Ingredients to the final finished dosage forms, he said, it was difficult to pin a reason to the trend.

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Between 2015 to 2019, China has been showing a declining trend of inspections on an annualised basis, from 442 inspections to 265, while India increased from 213 to 336, in the same period, the report said, adding that it could imply strong product filings from Indian sites.

Compliance concerns

Pointing to the regulatory overhang over the pharmaceutical sector, he said, India witnessed 38 USFDA inspections over the past 12-months. “Of these, four sites have received OAI (Official Action Indicated) citations. Around 18 inspections are awaiting citation (or an outcome) from the USFDA. Indian sites have received 60 OAI citations over Sep’19-Sep’22. Of these, 50 are yet to be re-inspected,” the report said, pointing to unresolved OAIs.

Regulatory compliance continues to pose a risk for Indian drugmakers with an exposure to the US generic drugs segment, he added. “The increasing number of OAI citations during the pre-Covid phase, delay in USFDA inspections after the implementation of remediation measures, and evolving requirements of compliance from the USFDA has raised the regulatory risks for Indian pharma companies,” the report noted. The prolonged period with OAI citations has delayed product approval from the respective sites. “And while companies have worked on alternate site filings for critical products, it continues to affect overall return on assets due to lower utilisation of sites under OAI,”it added.

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