Hike in ANDA processing fees
Recent USFDA hike of fee for processing ANDA will certainly going to put immense pressure on the Indian pharma industry, resulting eviction of many small players from this pharma export business.
Pharma exporters to US under pressure
United States’ Food and Drug Administration (USFDA), recently has increased the fee for processing Abbreviated New Drug Application (ANDA) by over $ 1 lakh to $ 1.71 lakh for the fiscal year 2018. This move is considered as a major setback for the Indian drug makers which accounts for major chunk generic medicines sold in that country. The hike was made under Generic Drug User Fee Amendments of 2017 (GDUFA II). The fee in FY17 was $ 70,480.
According to a notification on USFDA's website, fee for Drug Master File was reduced to $ 47,829 for 2017-18 from $ 51,140 in the last fiscal. These fees are effective on October 1, 2017, and will remain in effect through September 30, 2018.
The move will hurt the Indian pharma industry which is heavily dependent on the US market for exports, said a top official of Pharmaceuticals Export Promotion Council of India (Pharmexcil), a body under the Ministry of Commerce and Industry.
According to the Pharmexcil, this step will certainly going to put immense pressure on the Indian pharma industry and hence, resulting eviction of many small players from this pharma export business. However, the FDA has reduced the inspection fee for overseas Finished Dosage Firms to $ 2,26,087 from previous $2,72,646. Similarly, the inspection fee for overseas API (Active Pharma Ingredient) plant was fixed at $ 60,367 from previous $ 59,234.
The Indian pharma industry, which is expected to grow over 15 per cent per annum between 2015 and 2020, will outperform the global pharma industry, which is set to grow at an annual rate of five per cent between the same periods. The market is expected to grow to $ 55 billion by 2020, thereby emerging as the sixth largest pharmaceutical market globally by absolute size, as stated by Arun Singh, Indian Ambassador to the US. Branded generics dominate the pharmaceuticals market, constituting nearly 80 per cent of the market share (in terms of revenues). The sector is expected to generate 58,000 additional job opportunities by the year 2025.
India’s pharmaceutical exports stood at $ 16.4 billion in 2016-17 and are expected to grow by 30 per cent over the next three years to reach $ 20 billion by 2020, according to the Pharmaceuticals Export Promotion Council of India.
“According to Pharmaceuticals Export Promotion Council of India, Indian companies received 55 Abbreviated New Drug Application (ANDA) approvals and 16 tentative approvals from the US Food and Drug Administration (USFDA) in Q1 of 2017. The USFDA approvals are expected to cross 700 ANDA in 2017. The country accounts for around 30 per cent (by volume) and about 10 per cent (value) in the US$ 70-80 billion US generics market. This hike will definitely going to curb
“Indian companies received 55 Abbreviated New Drug Application (ANDA) approvals and 16 tentative approvals from the US Food and Drug Administration (USFDA) in Q1 of 2017. The USFDA approvals are expected to cross 700 ANDA in 2017. The country accounts for around 30 per cent (by volume) and about 10 per cent (value) in the $ 70-80 billion US generics market. This hike will definitely going to curb the growth of this sector.” - Asoke Talukder, Cofounder & Chief Scientific Officer, InterpretOmics, Bangalore
the growth of this sector and many players will have to leave this business,” said Asoke Talukder, Co-founder & Chief Scientific Officer, InterpretOmics, Bengaluru.
Pushpa Vijayaraghavan, Director, Sathguru Management Consultants, said that the three most significant changes in the Generic Drug User Fee Act (GDUFA Act) are – substantial increase in ANDA filing fees, introduction of size based annual program fees and significantly lower annual facility fees for contract manufacturing units. The $100k increase in ANDA filing fee (from about $70k in 2017 to $170k in 2018) will act as a strong deterrent for late entrants or marginal players in the US market.
This implies substantially higher financial risk per asset and will also result in more judicious portfolio decisions and capital allocation decisions. To justify higher fee levels, companies will choose more opportune pipeline assets and will only selectively focus on already genericized assets in leaner competition products. In fact, this is reflective of the current trend in larger Indian pharma companies that have already started focusing on more complex products. I also foresee a trend of small to mid-sized companies being financially constrained to file ANDAs on their own and more active pursuing partnerships for US market
Indian companies received 55 Abbreviated New Drug Application (ANDA) approvals and 16 tentative approvals from the US Food and Drug Administration (USFDA) in Q1 of 2017. The USFDA approvals are expected to cross 700 ANDA in 2017, thereby recording a year-on-year growth of 17 per cent.
For 2018, the Trump administration has budgeted over $2 billion in fees to be collected by the U.S. Food and Drug Administration from industry, twice as much as in 2017, according to budget documents.
“Though there are different categories of fee structures, definitely the hike is going to be a burden for Indian Pharma companies. However, given the potential, this would not deter us from filing ANDAs for the US market,” Uday Bhaskar, Director General, Pharmexcil. Bhaskar further explained that the US drug regulator cleared 598 ANDAs in 2016, out of which 201 were from Indian companies. During the first quarter of the current calendar year, the FDA Okayed 171 generic drug and 55 of them were filed by Indian companies.
“Over the past decade, India has evolved into a key supplier of generic drugs to the US. It is estimated that 35 per cent of the Abbreviated New Drug Applications (ANDAs) approved in the US every year come from Indian companies. Consequently, the regulatory compliance expected of Indian manufacturers is of the highest order. In addition to good manufacturing practice issues, FDA has also been raising concerns on systems and data integrity. We believe such increased levels of regulatory scrutiny are here to stay, and companies need to factor in the costs of operating at higher compliance levels into their business plans," said Krishnakumar V, Partner, E&Y India.
Contradicting all the other odds, Ajay Piramal, Chairman, Piramal Group, “I do not think the USFDA has been unnecessarily harsh on Indian plants. I think they do this across the board. If you see, some of the observations they make for some of the FDA stoppages that they have done, these are all public. So, there is nothing. Some of them are really strong reasons why they have done it.”
USFDA’s move to hike fee for processing ANDA is certainly not welcomed by the Indian pharma players. This will not only going to increase the financial burden on them but it will also knock off many small fishes from the pool. This step will torpedo the country’s market which accounts to supply huge chunk of generic medicines to the US market. However, how adversely this move is going to affect the Indian pharma sector that can be analysed in the coming months. But this stride will certainly going to pull the growth rate of the Indian pharmaceutical industry.
access, added Vijayaraghavan. The revenue base for GDUFA II is $ 493.6 million versus $ 323 million in the final year of GDUFA I - ANDAs are the primary workload driver of the program. GDUFA I was built on the assumption that FDA would receive 750 ANDAs per year.