Indian pharma grapples with quality problem

Indian pharma grapples with quality problem

Last Updated: Fri, Sep 27, 2013 05:13 hrs
A medical representative with Abbott talks to a chemist at a market in Pune

Suspected contamination, embedded hair, oil spots on tablets, lack of hot and cold water in toilets and inadequate written instructions to employees for proper quality checks-these are some of the lapses which led to the United States Food & Drug Administration, or US FDA, barring three facilities of Ranbaxy Laboratories from supplying medicines to the world's largest pharmaceutical market. This is not an isolated incident: manufacturing facilities of some other Indian pharmaceutical companies have been in a similar situation in recent times.

For instance, in March this year, US FDA inspectors found torn files in a waste heap and urinals that emptied into an open drain in a bathroom six meters from the entrance to a sterile manufacturing area while visiting a factory of Mumbai-based Wockhardt. And on inquiry by an inspector about the contents of unlabeled vials in the glassware washing area, a plant worker dumped them down a sink and said the contents could not be determined, according to a July 18 letter from US FDA to the company.

The disturbing trend is evident in the numbers. Data shows that so far in 2013, as many as 19 Indian drug manufacturing facilities, including those of Ranbaxy, Wockhardt and RPG Life Sciences, have been barred from supplying to the US. This is against two import alerts each in 2002 and 2009 and seven in 2011. India received no import alert during 2010. Apart from import alerts, various others such as Agila Specialities (Strides Arcolab's injectible arm), Fresenius Kabi AG's manufacturing facility in West Bengal and Hospira Healthcare India have received warning letters from the US FDA.

While many argue the trend is not unique to India, data depicts that enforcements are far less in other countries. For instance, China, a major supplier of active pharmaceutical ingredients or raw material to the US, has received seven import alerts during 2013-way below the 19 India has received. Some of the other large producers of generic medicine such as Australia, Canada and Japan have received two import alerts each during the same period, while South Africa faced only one import alert. Israel, which is a major generic producer with companies like Teva headquartered there, has not received any import alert so far for violations of manufacturing norms, US FDA data shows.

Increasing recalls, warning letters and import alerts to manufacturing facilities of domestic drug makers have raised concerns about the manufacturing practices followed by Indian companies. Experts and industry officials emphasise the need for companies to introspect and ramp up investments to ensure quality and compliance of medicines produced in India. The lid on the worst-kept secret was blown some months back when Ranbaxy agreed to pay a fine of $500 million for violation of good manufacturing processes. Earlier, in November 2012, the company had recalled certain dosages of generic atorvastatin (a blood thinner) after US FDA suspected it contained glass particles; the supply was resumed only in April this year.

Not up to the mark
"With the stringency in regulations, there is a clear distinction between companies with good systems and those with not-so-good systems. While those who have robust systems in place will certainly benefit from this, others should use this as an opportunity to make themselves aware and invest more in compliance systems," says Biocon Chairperson & Managing Director Kiran Mazumdar Shaw. Experts point out that indigenously manufactured medicines are not "sub-standard" in quality. "You must note that product quality is not in question because US FDA has not advised recall of products while imposing import alerts," says industry veteran Ramesh Adige who is also a former employee and director of Ranbaxy.

Industry analysts say the reason for concern is not so much with the enforcements, which are common in the pharmaceutical business, but the failure of companies to take adequate corrective measures. For instance, during inspections if US FDA inspectors find a problem, they issue Form 483 highlighting the deviations. The company is given a chance to take corrective measures and inform the regulator about them within a specified period. However, if the company fails to satisfy US FDA with its measures, it may attract a warning letter. The import alert, which bars a company from supplying medicines to the US from the ailing facility, is the last step in the process. According to Adige, the problem is with systems and procedures of compliance. "Form 483s will come to any company but you have to correct the observations highlighted in it and convince US FDA," he opines.

Ranbaxy, which was recently issued an import alert for its Mohali manufacturing facility barring all supplies from there to the US, was already undergoing a consent decree with the US regulator for its two key facilities in India-at Paonta Sahib and Dewas. The company is also learnt to have got a Form 483 at its US-based Ohm Laboratories, which is now probably its last resort for supplying to the US market. Industry officials, investors and other stakeholders are now questioning Ranbaxy's managing prowess. Adige says it is worrisome that even after Daiichi Sankyo took charge of the company in 2008, such systemic problems continue to exist. "Let us not forget that Daiichi Sankyo is in charge of the company now and it must do some introspection because there is a huge reputational risk now," he says. Even in the case of Wockhardt, the company failed to resolve issues with US FDA despite receiving Form 483, warning letter and import alert.

"Lapses such as unlabeled test tubes, batches of drugs or no supply of water in washrooms are nothing but a casual approach. It is a problem of mindset and culture, which needs to be changed philosophically," points out an official working with a pharmaceutical company. He insists that with the changing compliance scenario, when governments across the globe have become very particular about quality and Indian drug makers are already under the focus of regulators worldwide, companies cannot be so ignorant of the protocols. Analysts and regulatory experts also view the strategy of companies to handle such crisis as crucial. "This is not for the first time that a company is getting a warning letter. In fact, companies in the US have been receiving such alerts and signing consent decrees all this while. The industry is worried because in India it is a new thing and we are still struggling to deal with it," says an analyst. However, experts say that few companies such as Lupin and Sun Pharma have done a fair job so far by quickly putting things right and reaching a resolution with the regulator at an early stage.

Cutting corners
While time and cost are crucial to the generic drug business, industry sources suggest that companies often tend to bypass or take a casual approach towards various processes and procedures leading to systemic lapses. "Companies are in a rush to apply for first-to-files (it gives them six-month exclusive marketing rights in the US) and they want to be cost-competitive at the same time to gain a larger market share. In the process, compliance is compromised," says a regulatory expert. However, such lapses are often not permissible with international regulators such as US FDA and even the European regulators which are considered the strictest.

The rising penetration of generic medicines worldwide and the growing market share of Indian manufacturers are seen as primary reasons for Indian companies increasingly coming under the scanner. "With increasing penetration of generic drugs in the global market, the competition is also getting tougher and hence the changing compliance and stricter quality standards. Indian companies, which command a major share of this market, will certainly be subject to tight scrutiny," says ChrysCapital Managing Director Sanjiv D Kaul who has earlier worked with Ranbaxy.

Pharmaceutical exports grew 10.55 per cent year-on-year to $14.6 billion during 2012-13, according to the Pharmaceuticals Export Promotion Council. During 2011-12, the exports stood at $13.2 billion. However, industry experts are worried that with increasing global enforcements, the industry may miss its ambitious target of achieving exports worth $25 billion by 2014-15. India, with almost 200 US FDA-approved drug manufacturing facilities, is the biggest foreign supplier of medicines to the US. Pharmaceutical exports from India to the US rose nearly 32 per cent last year to $4.23 billion. India accounts for nearly 40 per cent of generic drugs and over-the-counter products and 10 per cent of finished dosages used in the US.

Kaul says that under the Obama regime, which promotes low-cost generic drugs to keep healthcare cost low, US FDA is also under pressure to ensure that the quality of medicines given to patients is not compromised. According to Praful Bohra, senior pharmaceutical analyst, Nirmal Bang, the domestic industry must invest in regulatory compliance procedures and systems to ensure that its future is secured. "This sector is running a major risk and investors are watching this sector very cautiously as are regulators. Companies need to focus on their investments on compliance process so that they do not lose market share in international markets," says Bohra.

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