Faced with a crackdown by the FDA on its domestic pharmaceutical industry, the Indian government is reportedly planning to provide financing to drug makers so they can upgrade their manufacturing facilities and meet U.S. standards.
The government is considering offering subsidies to drug makers and an announcement could be made next month as part of the planned budget for fiscal 2015, according to The Financial Express. The Small Industries Development Bank of India is expected to be one of the institutions to partner with drug makers, particularly smaller players that aspire to tap the large U.S. market.
“More than the top producers that are already cash rich, a financing scheme is likely to benefit small and medium-sized businesses that have to bear interest costs ranging from 12% to 18%, depending on the source of funds,” Ranjit Kapadia, a senior vice president at Centrum Broking, tells the paper.
The move comes not long after FDA commissioner Margaret Hamburg traveled to India to impress upon government and industry officials that the agency is concerned about the veracity of the pharmaceutical supply chain and planned to increase its scrutiny of wayward manufacturers.
Over the past year, the agency has issued warning letters to several Indian drug makers and last year, the FDA also issued 21 so-called import alerts that allow the agency to ban products from entering the U.S. One widely known example is Ranbaxy Laboratories, which is prevented from sending products from four of its plants in India and is also operating under a consent decree that requires improvements before the FDA will bless its facilities.
The quality-control problems have spurred debate in the U.S. about the reliability of generic drugs – the Indian drug makers that were identified as having substantive problems are big suppliers to the U.S. – and have also prompted the Indian pharmaceutical industry and regulatory authorities to acknowledge a need to upgrade facilities.
Much is at stake, because Indian drug makers are so dependent on the U.S. market. Last year, 26 percent of Indian pharmaceutical exports were to the U.S., which made this the largest export market for the industry, according to India Research & Ratings. And Indian drug makers have 523 manufacturing plants registered with the FDA, which is the largest number outside the U.S.