Hindustan Times ST (Jaipur)

Indian drug companies struggle to cope with US FDA’s rules

- Isha Trivedi isha.t@livemint.com

Indian drug makers are finding that it’s not enough to just tick the boxes on the quality control front but be fanatic about every tiny aspect to meet the US drug regulator’s elevated expectatio­ns. The US Food and Drug Administra­tion (FDA) has not only increased the frequency of its inspection­s but also intensifie­d scrutiny on drug manufactur­ing facilities.

Companies are being pulled up for lapses such as inappropri­ate clothing of employees, improper washing conditions and inadequate lighting, apart from issues relating to data integrity, batch failure investigat­ions or improper quality control systems.

“The issues that are raised point that the FDA is getting into tremendous level of details and more importantl­y, looking to inculcate a much more proactive approach in companies towards ensuring product quality,” Vishal Manchanda, an analyst at Nirmal Bang Securities, said.

The US is Indian pharma’s biggest market. Over the last six months, plants of drug makers including Sun Pharmaceut­ical Industries Ltd, Dr Reddy’s Laboratori­es Ltd, Lupin Ltd, Aurobindo Pharma Ltd, Glenmark Pharmaceut­icals Ltd, Cadila Healthcare Ltd and Biocon Ltd have underwent an audit by the US FDA and were issued the Form 483, listing observatio­ns related to violation of the so-called good manufactur­ing practices (GMP).

According to the FDA database, inspection­s of Indian manufactur­ing facilities rose to 290 in 2015 from 108 in 2009. India has a total of 572 US FDA-approved plants currently compared to 433 in 2013. The rise in inspection­s comes in the backdrop of Generic Drug User Fee Act’s (GDUFA) implementa­tion in the US in 2012 which sought to hasten generic approvals and eliminate disparrepo­rt. ity in inspection­s of US and foreign manufactur­ing facilities. One-fifth of FDA inspection­s happen in India and China currently, up from 11% in 2012, said Edelweiss Securities in a February The FDA has also made other changes. It has cut prior intimation time for plant inspection­s to as little as 24 hours from 25-30 days earlier. Inspection frequency has increased to once or even twice a year compared to once in two-three years earlier.

“The big shift we have observed in the US FDA’s mindset over the last few years has been the shift from a plant by plant focus to more of a network view. They are trying to get comfortabl­e with the robustness of the entire plant network,” said Vikas Bhadoria, a senior partner at consulting firm Mckinsey & Co.

“Their objective is to understand whether the overall operating system in the plant network is robust or not. When they have observatio­ns related to a specific plant, they expect the organisati­on to assure them that the challenge has not only been tackled at that specific plant but also pro-actively dealt with across the network,” Bhadoria said.

The Edelweiss report noted that since GDUFA, 55% of the total warning letters issued by US FDA were to facilities in India and China and most of them have not been resolved yet.

In an official blog uploaded in March, Mary Lou Valdez, US FDA’s associate commission­er for internatio­nal programmes said that quality issues are an ongoing challenge for the Indian pharma industry and in order to fully realize the nation’s potential, India’s regulatory infrastruc­ture must keep pace to ensure that global quality and safety demands are met.

Quality remediatio­n, however, is expensive.

“The cost of strengthen­ing operations and network infrastruc­ture works out to 5-10% of cost of goods sold. However, these day-to-day remediatio­n cost can be dwarfed by the full cost of poor quality. Remediatio­n related interventi­ons can lead to 20% or more long term unit cost increase due to additional manpower, process and infrastruc­ture changes, etc. Also, revenue losses can reach up to 20% of company’s sales,” said Bhadoria.

The regulatory overhang is likely to persist as over the next three years, the US FDA will inspect the pending 190 Indian facilities which it hasn’t audited in the past five years, Edelweiss said. The BSE Healthcare Index has shed 7.2% in the two years to May compared to a 10.8% gain for the benchmark Sensex.

“FDA has a simple rule: Say what you do and do what you say. Companies need to follow this. They need to simplify standard operating procedures,” D.G. Shah, secretary general, Indian Pharmaceut­ical Alliance, said.

 ?? HT/FILE ?? India has a total of 572 US FDAapprove­d plants currently compared to 433 plants in 2013
HT/FILE India has a total of 572 US FDAapprove­d plants currently compared to 433 plants in 2013

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