What's common between Ranbaxy, Sun Pharma, Dr Reddy's, Cadila Healthcare and Aurobindo Pharma? Well, aside of the fact that they are Indian pharmaceutical companies, there's another commonality — they have all been rapped on their knuckles by the United States Food and Drug Administration (US FDA) for having transgressed regulatory norms. And behold, the list isn't exhaustive.
There are many more Indian companies that have erred on FDA's wrong side, albeit for reasons varying in their severity. While some have managed to right the wrongs that the regulator had highlighted, the others are in the process of doing so.
So, what do these increasing instances of regulatory non-compliance say about Indian pharmaceutical companies? Here's a look at the ramifications of the growing non-compliance issues on the Indian pharma industry.
Industry's Achilles Heel
With power comes responsibility. But with growth comes greater attention. This is something that Indian companies have increasingly come to realise. Having scaled up very aggressively in the last few years, be it in terms of the number of manufacturing plants they operate or products in their portfolio, the Indian pharma companies have popped up more on the FDA's radar. And why not, for India boasts of the largest number of USFDA-approved plants in the world (over a 100) outside the US and is one of the biggest suppliers of cheap and quality generic drugs to the country.
So while the regulatory violations cannot be trivialised, they are best seen as regular business challenges than as some conspiracy from a Robin Cook novel, feel industry observers.
With companies now operating at scales many times over what they were a couple of years ago, monitoring and updating the various manufacturing systems and processes have become more challenging. And regulatory lapses, both minor and major, have been one of its fallout.
That said, there is no escape for companies from aligning themselves to the regulatory environment. While getting a warning letter or import ban is a matter of concern, what's more important is the follow-up measures the company takes to rectify its systems and processes.
With more companies being pulled up by the FDA for deviations in manufacturing practices, a significant improvement in quality standards can be expected in the coming years. While till such time, these transgressions may continue, the severity of each such instance is likely to come down.
FDA under pressure
The sudden surge in regulatory lapses is also partly due to the more stringent norms adopted by the US FDA, feel industry insiders. After having taken flak for its previous lapses — the Chinese Heparin case, lead in toys, or the Vioxx scandal, to name a few — the US regulator has been under pressure to improve the standard and quality of drugs that are sold in the country. As a result, what was acceptable in terms of manufacturing systems and procedures a couple of years back aren't now.
The regulator has raised the bar of the regulatory approval process in medicine. It has also expanded its presence overseas since then to ensure better vigilance standards at manufacturing plants of companies that export to the US. In 2009, the FDA opened office in India too.
India not alone
While Ranbaxy's violations have attracted “ground breaking” and “unprecedented” response from the US Department of Justice, the same yardstick cannot be used to tar products from other Indian companies as well.
For one, Ranbaxy's violated a major no-no in drug manufacturing by falsifying data submitted to the US FDA. In contrast, the others have been held up for violations (of varying degrees) in manufacturing practices.
Two, regulatory aberrations have marred companies from other countries too.
A look at the US FDA Web site reveals that companies across countries, including the larger and established innovator companies in the US have been given out warning letters for their plants in US as well as those outside. Companies such as Teva, Hospira and Novartis have also been warned. For that matter, Mylan recently received its first cGMP (current goods manufacturing procedure) violation in nearly 50 years for its Caguas, Puerto Rico facility.
In 2011, the FDA has issued over 590 warning letters, a tad lower than the 616 letters it issued in 2010 (570 in 2009). This shows that the standard the regulator imposes on facilities outside the US is the same it expects of facilities in the US too.
For instance, of the 14 API (active pharmaceutical ingredients) manufacturers that received a warning letter in 2011 (October 2010 through September 2011), the US and Chinese companies received the highest number of warning letters (four each), followed by India with three.
Takeaways
No doubt, these regulatory aberrations are best avoided. But for companies that have been pulled up by the FDA, look for:
Product approval count — has the company managed to sustain, if not grow its product approvals in the US. For instance, the generic approvals for Ranbaxy came down drastically after the FDA manufacturing ban imposed in 2008 on two of its facilities.
In contrast, despite the increasing non-compliance instances, Indian companies put together made up for one-third of FDA's generic drug approvals in 2011 (same in 2010).
Management speak — what measures are the company taking to address FDA's concern. For instance, when Lupin received a warning letter for its Mandideep facility in 2009, it incorporated the changes in all its manufacturing sites. Of course, be prepared for a long-drawn process.
Pedigree of clients and tie-ups — Companies also get audited by their clients and partners often. So if a company has a good number of big pharma clients, quality standards can be expected to be largely in line.