Indian firms must invest in compliance as USFDA ups enforcement, says S&P

US FDA enforcement evolving in India will drive compliance costs

Indian drugmakers must invest heavily in compliance processes in response to the US FDA’s “aggressive surveillance” and inspection programme, a Standard & Poor report has said.

Over the past year, a US Food and Drug Administration (FDA) clampdown on GMP violations at Indian API and finished formulation facilities has been widely reported, with Wockhardt, Ranbaxy, Sun Pharma and Canada-headquartered drugmaker Apotex being hit with import alerts.

However, a report published last week by Crisil - an offshoot of ratings agency Standard & Poor – has analysed the extent of the FDA’s actions in India and though it says the number of Form 483s, warning letters and import alerts have increased in the past three years, the number of enforcements as a percentage of FDA approved facilities in India remains low (15%) compared with other countries, including China (28%).

“The spurt in the number of warning letters or import alerts against Indian companies stems from the FDA’s focus on boosting the US drug supply chain rather than any country-specific bias,” the report says.

“India remains a location of significant importance to the FDA as it has the largest number of [non-US based] FDA approved drug-manufacturing plants (over 150 formulation facilities),” it continues, adding the FDA’s enforcements are “clearly due to cultural differences, attitude of employees, inadequate interpretation/understanding, and absence of due process and systems.”

Stringent FDA norms and increased compliance costs

The report also said the regulator’s approach to enforcement in India is evolving to follow protocols already normal in the US, including “aggressive surveillance and surprise inspections,” with visits conducted on short notice rather than with 2-3 months warning often catching companies unprepared.

Such strategy is due to an increase in FDA staff and infrastructure, with the agency having upped its number of inspectors by seven to 19, and opening offices in Hyderabad and Mumbai.

However, such actions will drive up the cost of compliance, with Indian drugmakers needing to invest in hiring new personnel and consultants, as well as upgrading facilities. “Companies have little choice but to invest in bringing compliance processes up to speed,” the report says, warning “the cost of not doing so will be far higher” as enforcement measures hit both current revenues and future pipelines.

Media Witch-Hunt?

Bangalore–headquartered drugmaker Biocon mirrored the report’s findings, telling in April: “India’s growing market share in the US - [almost 10%] - draws greater US FDA scrutiny which has resulted in a sudden spurt of alerts and notices.”

However, spokesman Rumman Ahmed said, warning letters and import alerts have been growing in numbers globally, “but nowhere except in India is the entire industry being unfairly victimized for the actions of a few.

“Unfortunately the global media attention that focuses on alerts or warning letters issued to Indian pharma companies fails to reflect the reality that we are not the only country facing USFDA action,” Rumman continued.

“Although some Indian drug makers have been red-flagged for non-compliance with current good manufacturing practices (cGMPs), the Western media has been unduly alarmist in reporting these developments.”

Whether or not this is the case, the infographic below shows the number of warning letters issued to API, finished formulation and biologics facilities in different regions since January 2012 and then split by year, based on the FDA’s enforcement action data.

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