Lupin sets off down In­dian pharma’s road to redemp­tion

Kuwait Times - - BUSINESS -

In 28 years in In­dia’s phar­ma­ceu­ti­cals sec­tor, Ra­jiv De­sai has never been busier. Most of the last six months on his desk cal­en­dar is marked green, in­di­cat­ing vis­its to the 12 plants of Lupin, In­dia’s No 2 drug­maker, where De­sai is a se­nior qual­ity con­trol ex­ec­u­tive.

Only one day is red - a day off. That’s what is needed these days to sat­isfy the U.S. Food and Drug Ad­min­is­tra­tion that stan­dards are be­ing met.

“In this sec­tor, you’re only as good as your last in­spec­tion,” De­sai said in his of­fice in sub­ur­ban Mum­bai. Often dubbed “the phar­macy of the world”, In­dia is home to the most FDA-ap­proved plants out­side of the United States and sup­plies about 40 per­cent of the $70 bil­lion worth of generic drugs sold in the coun­try. But sanc­tions and bans have badly dam­aged In­dia’s rep­u­ta­tion and slowed growth in the $16 bil­lion sec­tor. Drug ex­ports fell in the fis­cal year end­ing in March 2017.

Mil­lions in train­ing

More than 40 plants have been banned by the FDA for is­sues rang­ing from data fraud to hy­giene since In­dia’s then-largest drug­maker Ran­baxy was pulled up for se­ri­ous vi­o­la­tions in 2008. Drug com­pa­nies have spent mil­lions of dol­lars on train­ing, new equip­ment and for­eign con­sul­tants. Yet the In­dian Phar­ma­ceu­ti­cal Al­liance of the top 20 firms says its mem­bers still need at least five more years to get man­u­fac­tur­ing stan­dards and data re­li­a­bil­ity up to scratch.

The case of Lupin, whose shares are down about 27 per­cent since 2015 com­pared to a 13 per­cent drop in the Nifty pharma in­dex, shows why. The FDA is in the next few months ex­pected to clear Lupin’s Goa plant, which sup­plies around a third of its US sales, of prob­lems found in 2015, De­sai said. How­ever, the agency also pub­lished a new no­tice just last week cit­ing is­sues with data stor­age at its plant in Pitham­pur, cen­tral In­dia. If com­pa­nies want to con­tinue to sell into the world’s big­gest health care mar­ket, they must keep con­stant vig­i­lance.

Many in the in­dus­try ex­pect to see con­sol­i­da­tion among man­u­fac­tur­ers after a wave of merg­ers among US drug dis­trib­u­tors and in­creas­ing price pres­sures. “A lot of com­pa­nies will strug­gle to meet the re­quire­ments that are the need of the day, and I would ex­pect to see ad­di­tional con­sol­i­da­tion on the sup­ply side,” Lupin’s Chief Ex­ec­u­tive Vinita Gupta told an­a­lysts last month. Asked about Lupin’s case, the FDA said in a state­ment it did not “com­ment on com­pli­ance mat­ters”, but said gen­er­ally: “In­dia’s reg­u­la­tory in­fra­struc­ture must keep pace to en­sure that rel­e­vant qual­ity and safety stan­dards are met.”

Qual­ity con­trols

In­dia has its own stan­dards body, the Cen­tral Drug Stan­dard Con­trol Or­gan­i­sa­tion (CDSCO), which main­tains that its qual­ity con­trols are strin­gent enough to en­sure drugs are safe. “In­dia’s stan­dards are dif­fer­ent,” CDSCO head G.N. Singh said in an in­ter­view in his New Delhi of­fice. “In­dian com­pa­nies are com­pli­ant with our man­u­fac­tur­ing stan­dards. We can­not reg­u­late them ac­cord­ing to the US. stan­dards.”

The FDA has taken mat­ters into its own hands and grad­u­ally ex­panded in In­dia to more than a dozen full-time staff. In­spec­tions are fre­quent and in­creas­ingly unan­nounced. If the agency finds prob­lems, it is­sues a Form 483 - a no­tice out­lin­ing the vi­o­la­tions - which if not re­solved can lead to a “warning let­ter” and in worst case, a ban. Vi­o­la­tions range from hy­giene, such as rat traps and dirty lab­o­ra­to­ries, to inadequate con­trols on sys­tems that store data, leav­ing it open to tam­per­ing. None of the vi­o­la­tions the FDA has cited in In­dia have ex­plic­itly said the drugs are un­safe, and when com­pa­nies are banned by the FDA they can sell into other mar­kets, in­clud­ing in the de­vel­op­ing world, un­til the bans are lifted. There are also no stud­ies show­ing that the drugs have harmed any­one in the world. But by def­i­ni­tion, the no­tices are is­sued when the FDA finds con­di­tions that might harm pub­lic health.

Don’t tell any­one

In­dus­try watch­ers say Lupin, which spe­cial­izes in oral con­tra­cep­tives and drugs for di­a­betes and hy­per­ten­sion, is do­ing bet­ter than most. So far none of its in­frac­tions have ex­tended to a ban. On a re­cent visit by Reuters to its Goa plant, blue-uni­formed em­ploy­ees could be seen work­ing on gi­ant ma­chines, then mak­ing notes in hard­bound reg­is­ters. These are be­ing phased out as Lupin tran­si­tions to more se­cure e-files.

Em­ploy­ees are often video­taped to en­sure they fol­low stan­dard op­er­at­ing pro­ce­dure. Man­u­fac­tur­ers have cut back to fo­cus on qual­ity over quan­tity: Five years ago, Lupin was mak­ing one bil­lion pills a month at one of its Goa plants. Now it makes just 450 million. Both the com­pany and em­ploy­ees needed to be will­ing to ac­knowl­edge er­rors, De­sai said. The first im­pulse in the past was often “don’t tell any­one”, he said.

“We’re hu­mans after all, not ro­bots. We make mis­takes,” said Amol Ko­latkar, a pro­duc­tion head at the Goa site. As re­cently as three years ago, train­ing was a “for­mal­ity”, De­sai said. Now, when an er­ror is traced to an em­ployee, the en­tire team un­der­goes fresh train­ing. “I have worked at a pharma com­pany be­fore, but this is the first time I went through such a train­ing,” said an­other Lupin qual­ity con­trol of­fi­cer, who asked not to be named be­cause he was not au­tho­rised to speak to the me­dia.

“They told us a lot about the Lupin cul­ture and qual­ity, and also stressed on good man­u­fac­tur­ing prac­tices.” The qual­ity con­trol role is key. “They (Lupin) have had a prac­tice where com­pany’s qual­ity heads re­port di­rectly to Nilesh Gupta (the man­ag­ing di­rec­tor),” said Amey Chalke, an an­a­lyst at HDFC Se­cu­ri­ties.

“Some other com­pa­nies have also started do­ing that now.” The com­pa­nies also have to be will­ing to spend big. Lach­man, PwC and Bos­ton Con­sult­ing con­duct mock au­dits at the Goa plant ev­ery three to six months, at a cost of up to $400 an hour. “These days the FDA is giv­ing us 483 on small, small things,” a third qual­ity con­trol of­fi­cer said. “So we are al­ways au­dit­ing.”

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