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Time for Indian pharma companies to brace up

Many believe that it is pressure from a section of the US pharma giants who see their market shrinking that has prompted the USFDA's excessively suspicious approach towards them.

Time for Indian pharma companies to brace up

Many believe that it is pressure from a section of the US pharma giants who see their market shrinking that has prompted the USFDA's excessively suspicious approach towards them.

November 15, 2015: Dr Reddy's Laboratories, India's only New York Stock Exchange-listed pharma company and among the top three players from India, receives a mail from the US Food and Drugs Administration (USFDA) about an inspection the latter carried out of three Dr Reddy's manufacturing facilities in Andhra Pradesh and Telangana. "We identified significant deviations from current good manufacturing practice for the manufacture of active pharmaceutical ingredients," it says. It then gets down to details, which include some rather surprising specifics like: "Because the conveyor belt was not operational (at one of the units), an operator manually intervened.....Each of these manual interventions risk compromising the sterility of the product." And again: "During the inspection, the presence of an uncontrolled 'custom QC laboratory' was discovered by our inspection team. The existence of this laboratory was previously unknown to the FDA?"

December 17, 2015: India's biggest pharma company, Sun Pharma, gets a mail from the USFDA pertaining to an inspection of one of its largest units in Halol, Gujarat, and one of the observations in the letter is: "The floors, walls and ceilings in your aseptic processing area were not maintained as smooth, hard surfaces that were easily cleaned. Our investigator documented the presence of leaks in the form of water stains and ceiling damage in the parenteral (injectables or infusions) manufacturing area personnel corridor. The FDA investigator observed buckets with water collected from ceiling leaks and other leaks in this manufacturing area?"


These are only the latest examples of the USFDA's laser-beam focus on the functioning of Indian pharma companies that export to the US. It is not only Dr Reddy's and Sun Pharma: in 2015 alone, eight other manufacturing units located in India got similar letters - those of Unimark Remedies, Pan Drugs, Mylan Laboratories, Sipra Labs, Mahindra Chemicals, Cadila Pharmaceuticals, Micro Labs and the Bangalore facility of the Canada-based Apotex.

These apart, in 2013 and 2014 as well, a range of top names in Indian pharma received warnings: Cipla, Lupin, Zylus Cadila, IPCA and Ranbaxy (which has since merged with Sun Pharma) among others. A few even had exports to the US from specific units blocked. What makes the cases of both Dr Reddy's and Sun Pharma more curious is that both these companies had been communicating with the USFDA over the matters referred to in the mails for almost a year and were taking steps to improve. Apparently, the regulator is still not satisfied as is evident from the warning letters it has chosen to issue.

The warning letters of 2015 have another significant feature. Almost half of them relate to units manufacturing active pharmaceutical ingredients (APIs). A number of those pulled up also make injectables. Indian companies have lately been moving beyond generics in the US into these segments, which require higher levels of quality and sterility of the immediate environment.


No respite: USFDA inspections of Indian drug companies hit an all time peak in 2014/15 and are likely to grow further

Indian manufacturers are quick to see a conspiracy. Many believe that it is pressure from a section of the US pharma giants who see their market shrinking that has prompted the USFDA's excessively suspicious approach towards them. There is no doubt that the sale of India-made generics in the US has been increasing and, at present, comprises around 40 per cent of all US generics sales. APIs and injectables are making a dent. A widespread refrain is that vested interests are trying to impose curbs on the sale of Indian drugs in the US. Lending credence to such fears are also developments such as the mail sent in December by Fred Upton, Chairman of the US House Energy and Commerce Committee, to the Comptroller General, US Government Accountability Office, maintaining the USFDA was not being stringent enough!

"Import lines from emerging markets including China and India have grown more rapidly in recent years than lines from developed markets," the letter says. "China is now the world's largest supplier of active pharmaceutical ingredients (APIs) and has the largest number of foreign, FDA-registered drug making establishments, followed by India. The volume of imported drugs has?significantly complicated the FDA's ability to provide sufficient oversight."

Stories also proliferate about how USFDA inspectors examine even dustbins and urinals at manufacturing facilities in a bid to catch out Indian drug makers. Specific USFDA inspectors have been named, especially Peter E. Baker, for their excessively finicky approach. But does this absolve Indian pharma companies of the charge of having ignored their shortcomings till the USFDA took them to task? "If Indian pharma companies want to supply high value, high margin products, especially injectables, to the US, they have to focus more on cleanliness and sterile conditions within their manufacturing units," says a pharma insider who does not want to be named.

Indeed, Indian pharma companies cannot take the USFDA lightly, considering that over 40 per cent of their sales are in the US and many of them earn more from the US market than from the domestic one. They have to reconcile to the fact that USFDA inspections are increasing and will continue to do so. For the past decade, for instance, there have been many more USFDA inspections of Indian drug makers' factories than of those in China and Canada, two other countries which, like India, supply a good number of drugs for the US market. (See No Respite.) In 2014/15, for example, Indian companies faced 203 inspections against 132 by Chinese companies and 52 by Canadian ones. Though China has been known as the largest global supplier of APIs, the USFDA has three full-time inspectors based in India - who are often augmented by more inspectors flying in - and just two in China.


D.G. Shah, Secretary General, Indian Pharmaceutical Alliance

"More inspections should not mean more failures; companies have to introspect"

While the total number of inspections in other countries carried out by the USFDA has increased from 338 in 2006/07 to 842 in 2014/15 - about 1.5 times - those of Indian drug manufacturers' facilities has risen from 66 to 203, or more than two times. But that is no excuse to fall short of USFDA standards. "More inspections should not mean more failures," says D.G. Shah, Secretary General, Indian Pharmaceutical Alliance (IPA). "This is something Indian pharma companies will have to introspect on, and correct."


G.V. Prasad, Co-chairman and CEO, Dr Reddy's Laboratories (Photo: Nilotpal Baruah)

"The letter underscores the need to reevaluate the work done in light of the observations made and continue to implement corrective and preventive actions"

Dr Reddy's seems to have already done so. In an investor update conference call, G.V. Prasad, CEO of Dr Reddy's Laboratories, analysed the contents of the warning mail the USFDA had sent. "(The observations) are in four broad categories: documentation and control; practices and control; laboratory testing procedures; and adequacy of standard operating procedures and incident investigation practices," he said. "These are the buckets, but within them there are some nuances, some of them are computer controls, some of them are paper controls, some of them are how we handle chromatograms and all that." And what was Dr Reddy's planning to do about it? "The letter underscores the need for us to reevaluate the work done in light of the observations made and continue to implement the corrective and preventive actions fully, assess the impact of FDA's observation on our products as well as enhance our overall quality management system," Prasad added.

Other pharma exporters, too, will have to get down to enforcing good manufacturing practices more rigorously.

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