India’s Pharma Sector-Sailing through Rough Weather

India’s Pharma Sector-Sailing through Rough Weather

featured-storu-thumb2Pharma Industry in India – both domestic companies and Multinationals – is going through rough weather. Trouble is mounting every single day. Here are some major concerns:

First it was the issue related Clinical Trial concerning the MNCs.

Then, NPPA’s (National Pharmaceutical Pricing Authority) fixation of ceiling price impacting both the MNCs and domestic companies.

Since the last couple of years, USFDA, MHRA and MEA barring Indian manufactured drugs at their plant for non compliance of safety measures and other procedural norms.

And now, the Government’s order on ban of FDC (Fixed Dose Combination) drugs. Here the matter has become a contentious issue.

What is ailing the Indian Pharma industry?

LSW looks at the current industry scenario through a feature in two parts:

Part I – Indian Drug Firms under the scanner of Global Regulators

LSW is privileged to get comments from Mr. Russell Wesdyk, Acting Director for OPQ’s office of Surveillance, USFDA and Mr. Gerald Heddell, Director-Inspection Enforcement & Standards Division, MHRA, UK Government by way of exclusive interviews.

Part II – Ban on FDC drugs (Feature follows shortly)

Part I – Indian Drug Firms under scanner of Global Regulators

LSW Viewpoint
Major marketer of drugs in US and UK the domestic pharma companies, since the last couple of years are facing rough weather in their journey. Some of the major Indian companies have come under the scanner of global regulatory agencies particularly of the USFDA.

The Warning Letters that are sent to number of leading companies are set to block new product approvals and launches. One of major issue for the warning letters is that the USFDA is not satisfied with the domestic companies towards greater emphasis on implementation of GMP.

Why the USFDA, MHRA and EMA have banned plants of Top Indian Pharma Companies manufacturing generic medicine for USA, UK and Europe
India ‘s  $15 billion  pharmaceutical  Industry along with China is an important global supplier of cheaper generic medicine to  the United States of America, United Kingdom and Europe.

In fact, India supplies 33% of medicines sold in USA and nearly a quarter sold in U.K.

China and India account for about 80% of the main ingredients in the World’s Drug Supply. But this almost monopolistic situation is rapidly changing.

Going by various reports, trouble started for India’s generic drug manufacturers after the USFDA ,the European Medicine Agency (EMA) and United Kingdom’s  medicines and healthcare regulatory agency (MHRA)  banned 39  plants of 27 Indian companies from producing drugs for their market on issues of Hygiene, maintenance, quality violations and falsifying  manufacturing related test results and data. The list of companies include India’s largest drug manufacturers like Sun Pharma,  Lupin Ltd, Cadilla Healthcare, Wockhardt, Pan Drugs, IPCA etc.;

The final nail in the coffin was the decision by the U.S. Government to manufacture API (active pharmaceutical ingredients) locally and stop all imports of API from China, India and other countries.

Reasons for falsifying Manufacturing test Results and data by Indian Drug Makers
Some of the reasons for violating quality standards and falsifying data integrity set by the Regulatory agencies like USFDA and others may be because adherence to GMP is critical and very costly and represents up to 25% of a finished drug manufacturing  operating costs. To offer more competitive pricing and gain market share, many drug manufacturers forgo expensive quality standards by falsifying manufacturing related test results and data.

What are the steps contemplated by the Indian Drug manufacturers to adhere to quality standards of USFDA, EMA and MHRA
The Indian Pharmaceutical Alliance (IPA), which is the lobby group of the Indian generic drug makers  has as its members India’s largest drug manufacturers like Sun Pharma, Dr. Reddy’s lab, Cadilla, Lupin, Torrent, Cipla and others, these have recently come under the scanners of the USFDA, EMA and MHRA on issues of falsifying manufacturing related test results and data.

In a meeting of IPA with USFDA and others held recently, the member companies  have agreed to make concerted efforts to address the issues raised by the USFDA and others and improve manufacturing quality and follow data integrity set by the regulators scrupulously by

  • Setting up quality management training institutes
  • Incorporate automation in manufacturing
  • Set up quality control units
  • Encourage employees to report ‘pain points’ openly

Additionally the IPA has hired consultants McKinsey & Company to prepare data integrity guidelines’ and help implement data controls.

The Road ahead for the Indian Generic drug and API manufacturers
The road ahead for the Indian drug manufacturers is indeed very rocky and full of pitfalls. They not only have to strive hard to keep the prices low to retain their market share in the World market but also spend more on maintaining the quality standards prescribed by the  Regulators from USFDA, EMA and MHRA . The Indian Generic Drug manufacturers have also not received any help from the Indian drug regulators so far except to sign an MOU with MHRA to increase regulatory collaborations.

Though the decision by US to manufacture API locally may impact the Indian Drug makers only to a limited extent as it applies only to drug procurement by the US Govt, it will have the effect of driving up the cost of medicines in USA enormously.

It is time now for the Indian generic drug manufacturers and the Government of India to sit together to find solutions before India loses its share of the World’s market for affordable medicines. While India’s large drug manufacturers may exit the generic medicine market for other options, it will be the smaller players in the generic medicine manufacturer and the World’s patient population who will be deprived of affordable medicines and Health care.

LSW sought comments from Mr. Russell Wesdyk, Acting Director for OPQ’s office of Surveillance, USFDA, Mr. Gerald Heddell, Director-Inspection Enforcement & Standards Division, MHRA, UK Government.

Excerpts from exclusive interview with Gerald Heddlell, Director, Inspection Enforcement & Standards Division, MHRA

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Gerald W Heddell, BSc CBiol MSB MRSC DMS Director of Inspection, Enforcement & Standards Medicines & Healthcare products Regulatory Agency

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LSW:  Your views on the outcome of the meeting held in February 2016 between the Indian pharma companies and the Regulators

Gerald Heddell: The meeting provided a platform for regulators and industry to openly and frankly discuss areas concerning Indian and global pharmaceutical manufacturers.  The discussion held was very positive and the MHRA looks forward to seeing what impact the conference and IPAs work will deliver


LSW:
 Which are the areas of operation Indian pharma companies need to focus on?

GH: In general the issues facing Indian pharmaceutical manufacturers are also seen by pharmaceutical manufacturers globally.  The most serious failures in GMP that require the MHRA to take regulatory action most commonly involve:

Serious Pharmaceutical Quality System failure (including corrective and preventative actions, management oversight and resourcing, quality defect investigations and actions and operational cross-contamination cont

Issues with on-going stability programmes

Quality defects with public health impact

Data Integrity

LSW:
 Your views on the data integrity that is maintained in India

GH: Whilst the MHRA has detected data integrity concerns during some of our inspections conducted with India, issues with data integrity are not confined to Indian companies.  Data integrity issues have been identified in a number of countries in which we perform inspections.

You can keep up to date with MHRA data integrity guidance by subscribing to the MHRA Inspectorate blog – https://mhrainspectorate.blog.gov.uk/

LSW:
 Can you elaborate on the objectives of the Regulatory collaboration between MHRA and CDSCO and the current activities?

GH: The Memorandum of Understanding (MOU) was agreed between MHRA and CDSCO on . 5 October 2015. This agreement will increase collaboration between the 2 countries in the area of medicines and medical devices with the aim of further improving public safety in the 2 countries.  It provides a formal agreement between the 2 organisations, and strengthens relations between the UK and Indian governments.

The central understandings of the agreement include promotion of each other’s regulatory frameworks, requirements and processes. Significant outcomes will include the facilitation and exchange of information and opportunities for technical cooperation of mutual benefit, helping to ensure the regulators are better equipped to protect the health of their citizens.

LSW:  Details of medicines are available to the general public on the Internet and other social media are a matter of concern on safety issues. What do the Regulatory agencies say on this?

GH: The availability of unregulated medicines through the Internet and the use of social media to advertise these is a global problem. We have found the most effective method of dealing with this is to reduce demand by education and raising public awareness as to the dangers of buying medicines outside the regulated supply chain. In terms of enforcement, developing relationships with public and private bodies and executing joint proactive strategies to deal with websites and the criminals behind them is key – the Interpol Operation Pangea is an excellent example of how effective this can be.

http://www.interpol.int/Crime-areas/Pharmaceutical-crime/Operations/Operation-Pangea

https://conversation.which.co.uk/health/buy-medicines-online-illegal-safe-dangerous/

Excerpts from exclusive interview with Russell Wesdyk, Acting Director for OPQ’s Office for Surveillance, USFDA

Russell Wesdyk, Acting Director for OPQ’s Office for Surveillance, USFDA
Russell Wesdyk, Acting Director for OPQ’s Office for Surveillance, USFDA

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Q. Your views on the outcome of the meeting held in February 2016 between the Indian pharma companies and the Regulators

I think this was a useful forum where various regulators from US, Europe and India could share thoughts with the pharmaceutical industry stakeholders in India regarding quality of product and GMP requirements. India is an important region that makes many critical drugs, so dialogue is good.  I think we were successful hearing from stakeholders and in noting that our requirements are the same worldwide.

Q. Of late, Indian pharma companies are undergoing severe pressure because of the USFDA’s regulatory framework. Some of the Indian pharma manufacturers were issued warning letters pertaining to the manufacturing operations being carried out at their plants. Which are the areas you feel to be improvised and comply with your regulations?

The comment about “severe pressure” is confusing and potentially misleading.  FDA inspectional frequency for the various regions, including India, is directly proportional to the number of firms producing drugs for the US market. There is no risk factor in inspectional decisions (where to go) that is based on geography – for any region.  Indian firms are selected for inspection the same way, using the same factors, that a US firm or any other firm around the world is selected.  Its important this be understood. Further, inspectional outcomes of US inspections of Indian firms follow similar trends of other regulator’s inspectional outcomes. The bottom line is Indian firms are selected and evaluated in a manner consistent with any other firm, in any other region.

Q. What are ‘Quality Standards’ specified by USFDA with regards to manufacturing?

FDA agreed this vision with industry stakeholders, academia, and other regulators some time ago:

“A maximally efficient, agile, flexible pharmaceutical manufacturing sector that reliably produces high quality drug products without extensive regulatory oversight.”

We view quality as a product fit for its intended use and free of contamination.  This goal can not be achieved with end product testing alone and the GMPs as outline in 21 CFR part 211 are a critical pillar to that vision, as is a strong company quality culture and a commitment to operational excellence that begins at the product development stage with the use of QbD (Quality by Design) principles.  Industry – including India – is working to achieve this vision and is making progress.  At the conference I noted the draft and preliminary results of a sampling study which continues, but showed potential indication that India as a whole was performing at a similar level to other regions.

Q. What are the mandatory procedures Indian companies are expected to follow with regards to clearance of their manufactured products being marketed in the US?

Commitments made in applications, or requirements of various compendia such as the USP (in the case of the US market), along with the GMPs outlined in 21 CFR Part 211 are examples of mandatory requirements.  GMP or ‘Good Manufacturing Practice’ are the regulations which provide a frameworks that supports product quality.   GMP requirements are not definitive instructions on how to manufacture specific products; rather they forms a series of general principles and a legal framework that is designed to help prevent quality problems.  But GMPs alone can not ensure quality any more than end product testing can and this is why FDA is driving towards a quality culture rather than simply a culture of compliance.  There are many other important elements critical to producing quality products that are discussed in later questions.  It may also be useful to note that there may be many ways to comply with GMP requirements and it is the company’s decision to determine the most effective and efficient way to do so. This provides flexibility, and allows the manufacturer to interpret the requirements in a manner which makes sense for each individual business operation.

The mandatory requirements are no different for Indian firms than any other manufacturer, are well known, and Indian companies are generally doing a good job. The Indian press tends to focus on those firms having issues, but India, like every other country or region, has some firms that are doing well and some firms that have failed an inspection and are in remediation to improve their processes.  I want to stress that the whole idea of only looking at what is mandatory, or the focus on India alone, is misguided both in terms of US and Indian patient’s interests.  It is well documented that the electronic and many other industries operate at a 6 sigma level.  As noted by many third parties – including at the IPA conference – the pharmaceutical industry operates at a 2-3 sigma level.  This is an industry problem, not an Indian problem, and because the costs of defects is so high in a 2-3 sigma process, the cost of life saving medicines is driven way up and the ability to reliably supply patients is driven way down as we have seen with the drug shortages.  Indian and American – indeed ALL – patients deserve better. Why should their cell phone be produced to a higher standard than their life saving medicine?

Q. Quality assurance level differs from country to country as different countries have different resources and limitations. Under these circumstances, how does FDA imply the norms?

I must reject the premise of the question.  Quality assurance levels do not differ from country to country if you look broadly at industry.  If you understand that it costs many times more to produce a poor quality product via a 2-3 sigma process than it does to produce a high quality product via a 6 sigma process, why would you run a high cost – low quality process?  Many firms around the world including India that used to run 2 lines – one for developed and regulated markets and one for the rest of the world – realized they were driving their costs up, not down, and now just run one high quality line.  There is a fact that the question fails to understand: quality pays for itself many time over.

LSW sought comments from Subrata Ray, Sr. Group Vice President, ICRA which is as follows:

subrata-ray
Subrata Ray, Sr. Group Vice President, ICRA

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The growing incidences of issuance of Warning Letters & Import Alerts for manufacturing facilities have in India reflect greater focus of regulatory bodies like US FDA or European authorities on compliance of cGMP. Such regulatory actions are steadily emerging as a key risk for the sector as they hold potential to delay product approvals and launches in the U.S. and other regulated markets. The generic industry worldwide remains highly competitive with strong pricing pressures; in this backdrop the regulatory strictures can add significantly to margin pressures. Some of the common reasons that have actually prompted regulatory action include:

  • Inadequate systems and controls to prevent alteration in laboratory test results and associated documentation
  • Slippages with respect to adherence of cGMP guidelines during R&D, validation and manufacturing stages and
  • Absence of robust manpower training programs and management systems

As a result of these, pharmaceutical companies are now mandated to review their R&D and manufacturing procedures, implement comprehensive action plans and even conduct risk assessment of products that are already in the market. Based on the severity of the deviations, the FDA has also directed some companies to get third-party evaluation of their remediation processes. In addition, companies have also been forced to take site transfer and pursue filings from dual locations for future ANDAs. We believe, these measures are likely to entail significant investments and impacts earnings.

Our analysis of the resolution of warning letters suggest that large pharmaceutical companies have a superior track record in resolving FDA’s observations vis-à-vis the mid-size companies. Additionally, the escalation of warning letters to import alerts also stands higher for small and mid-size companies. In terms of the time period, ~50% of the warnings letters have been resolved within 12-15 months period with the average time frame being 24 months.

From the credit perspective, we believe some of the larger entities are unlikely to be impacted significantly in view of their strong balance sheets and liquidity.

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