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.

BioSpectrum (India) - - FRONT PAGE - Nitin Konde nitin.konde@mmac­tiv.com

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.

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