India QC issues could hinder growth in US

Increase in regulatory scrutiny comes after the share of India-made products in the US market increased from 18% to 33% in the five years to 2014

Increased regulatory scrutiny as reflected in the growing issuance of warning letters and import alerts and consolidation of supply chain in the US market resulting in pricing pressures is set to have an impact on the competitiveness of Indian pharmaceutical companies, according to Subrata Ray, Vice President at ratings agency ICRA.

Indian pharmaceutical companies have registered strong growth over the last decade in the US market, given the large brands going off patent and sizeable organic and inorganic expansion. Going forward there are challenges, though, given the relatively moderate proportion of large sized drugs going off patent, increased competition, generic adoption reaching saturation levels in the US market along with base effect catching up.

However, the agency has said that given the increased R&D expenditure of Indian pharmaceutical companies with product pipeline comprising of speciality drugs, niche molecules and complex therapies, the growth outlook for the Indian pharmaceutical sector remains stable.

But quality control remains an issue. Drug manufacturing units in India accounted for 60% of reported data integrity violations in the records of the US regulator from 2011 to 2016, highlighting serious quality control issues. A report by Nomura Research reveals that 27 of the 45 Food and Drug Administration’s warning letters in this regard were to plants in India, both domestic and foreign-owned, including Wockhardt, Sun Pharmaceutical, Dr Reddy’s Laboratories, Cadila Healthcare, Sandoz, IPCA Laboratories and Mylan Laboratories.

Currently, 15 plants in India have import alerts against them. Analysts have said the increase in regulatory scrutiny comes after the share of India-made products in the US market increased from 18% to 33% in the five years till 2014.

Nomura Research analysts analysed about 200 warning letters issued by the FDA during the five-year period, of which 45 explicitly mention data reliability violations. While no plant in India was found violating data integrity by the FDA in 2012, as many as seven and nine plants in 2014 and 2015 respectively were found slipping on quality control procedures. 

Of the 27 warning letters to Indian facilities, only one issued to Cadila Healthcare in 2011, has been withdrawn, the analysts noted. The company’s Moraiya unit in Madhya Pradesh was approved by the US regulator in 2012. However, the company faced regulatory issues and the Moraiya unit once more received a warning letter in December 2015.

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