Hauled up by the US Food and Drug Administration for product recalls and quality issues, Indian pharmaceutical companies are fleeing for cover. Or are they? A closer look will reveal that it is not just Indian drug majors that are under the US FDA scanner, reports The Pharma Letter's India correspondent.
Warning letters about violations have been sent out to drug companies in Australia, Canada, China, Austria, Germany, Netherlands, Ireland, and Spain.
The USA imports around 40% of the finished drugs and nearly 80% of the active pharmaceutical ingredients it needs. Given its rising imports from overseas sources, the FDA has become more vigilant about regulatory adherence.
About 30%, or $4 billion worth of India's pharma exports are to the USA. While just five companies tot up close to $3 billion of this, namely Ranbaxy, Sun Pharma, Dr Reddy's Lab, Cipla and Lupin, mid-sized drug makers such as Glenmark Pharma, Torrent Pharma, IPCA Laboratories and Alembic Pharma account for the rest.
A report by Crisil, which is an offshoot of ratings agency Standard & Poor, has noted that the increased scrutiny by the USFDA is not due to any India specific bias, but is because India's share of Abbreviated New Drug Application approvals has been more than those of global peers. To date, the top 10 Indian pharma companies account for over 800 ANDA filings.
Generic drive
The drug regulator has also become stringent given the high generic penetration. “India is the second biggest drug supplier to the USA in terms of volume of generic drugs, after Canada. The US government relies on generic drugs, especially those from India, to help rein in escalating costs,'' said Sudip Sural, senior director, Crisil Ratings.
Stating that India is home to the largest number of FDA approved drug manufacturing plants, with over 150 drug facilities, he said the US regulator would not target Indian companies, as has been made out, when it is so dependent on it for low cost medicines.
Mr Sural blamed a culture clash between the US FDA and Indian drug majors, for the flurry of recalls and import bans. The safety of a drug in India is monitored by collecting and testing samples of the drug, whereas in the USA, the regulation is on the manufacturing process. If any violations are found, the final product is termed defective, he said.
“Even though four of Ranbaxy's facilities of its five manufacturing units are barred from exporting to the USA, and the company derives about 40% of its revenue from there, Ranbaxy's application to launch a generic version in the USA of Novartis' blockbuster hypertension drug, Diovan (valsartan), has just got the green signal. The application was pending since September 2012,'' Mr Sural added.
With the annual US market for Diovan estimated at around $1.5 billion, and Ranbaxy bagging sole marketing rights for 180 days, analysts have said the Indian drug company could well capture around 50% market share, and earn a revenue of around $150 million.
Incidentally, Wockhardt continues to struggle with a sharp decline in profits, since exports generated around 80% of its revenue, and the US FDA has barred drugs from two plants.
Same problems
However, the packaging or manufacturing violations are not specific only to companies with drug plants in India. FDA investigators face similar problems in other countries too.
Satish Reddy, chairman of Dr Reddy’s Laboratories and president of trade body the Indian Pharmaceutical Alliance, said that companies across the world, including innovative and large generic companies, have regularly received warning letters from the US FDA. Although import alerts and warning letters to India have increased over the past three years, Mr Reddy said that India has received fewer enforcements at 15%, as compared to China’s 28%.
Meanwhile, an analysis of import alerts over the past five years shows that the US regulator has reprimanded more domestic companies. The US FDA issued warning letters to 114 US based drugmakers for marketing related offences, and hauled up others for faulty manufacturing processes as well as for tall claims, according to details on the FDA website.
In comparison, Indian drug firms had 22 warning letters issued by the US FDA for manufacturing lapses, while six companies were pulled up for misleading promotions, during the same five year period.
Even as 17 UK based pharma companies were hauled up for false product claims, Chinese drug producers too have been reprimanded for quality compliance issues. Data showed that 12 manufacturing facilities, owned by Chinese pharma players, have received warning letters. Germany followed China, with 10 of its companies receiving letters from the USFDA, while drug producers in Brazil, Australia and the Netherlands have also been reprimanded by the regulator.
In 2013 too, the US FDA website showed that warning letters were issued to companies like Boehringer Ingelheim Pharma, CMI Cosmetics Manufacturers, Wyeth Lederle Spa, Apotex, as well as to Novo Nordisk, among other multinationals.
Recalls and warnings
Recalls and warning letters may be de rigueur with Indian drug companies, but again, they are not the only ones.
On July 11, India's largest drug maker by sales Sun Pharma, recalled about 40,000 bottles of anti depressant venlafaxine for failing a dissolution test. The recall was made by Sun Pharma's US subsidiary Caraco Pharma, for drugs manufactured in the company's Indian facility, the USFDA said. Starting March, Teva Pharma recalled 40,000 drug bottles manufactured by Emcure Pharma at its plant in Pune, India, due to deviations in lab testing.
Piramal Critical Care recalled 2,052 glass vials of veterinary product Petrem, used for general anesthesia in dogs, in the USA for not meeting specifications. Piramal Critical Care has product availability in more than 113 countries, and is part of the Piramal Group, a diversified Indian conglomerate.
In June, Dr Reddy’s recalled 13,560 bottles of metoprolol succinate extended release tablets from the marketing circuit, due to failure of dissolution test.
Sun Pharma also recalled 200 vials of cancer drug Gemcitabine in April, from the US market, for lack of assurance of sterility. Though Sun Pharma is the third Indian company in a month to recall its drugs after Wockhardt and Dr Reddy's, all the voluntary recalls are not limited to India alone.
Pfizer had initiated a voluntary recall mid April for 220,761 bottles of antidepressant Pristiq (desvenlafaxine) extended release tablets. Pfizer recalled two lots, adding up to 104,450 bottles.
In April, Teva voluntarily recalled 19 lots of the extended release version of duloxetine capsules. The drug was manufactured in Israel, and the total recall added up to 1,050,266 bottles. The company also recalled another 258,000 cylinders of its inhaled asthma drug Qvar in the same month.
Higher costs
The Crisil report has noted that complying with stringent FDA norms would hike the cost of compliance, and Indian drug makers would need to hire personnel and consultants, as well as invest in upgrading facilities to ensure strict GMP standards.
Stating that the cost of compliance of Indian pharma companies has doubled over the past five years, the report noted that drug companies would have to invest to ensure that compliance processes were up to speed. The agency added that large Indian drugmakers had the ability to bear the increased cost of compliance as well as the financial flexibility to do so, and would continue to remain competitive in the US market.
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