THE US FDA SCANNER - MORE GET UNDER
By Ruma Dubey
“Everyone has different standards about cleanliness. The Westerners have different standards, we have different standards.”
We all had fumed, raved and ranted over this comment of Lalit Bhanot, the Delhi Commonwealth Games’ spokesperson. It was a politically incorrect thing to have said but had it hit home and hurt because it was true and we were simply in denial?
This is the thought which comes to mind when we read this news today about Ipca labs also being pulled by the ‘villain’ of Indian pharma companies – the U.S. Food and Drug Administration (U.S. FDA). The stock is the top loser today on news that the FDA has initiated action at the company’s Indore SEZ plant and Ratlam API unit. To make matters worse, foreign brokerage house, Credit Suisse downgraded the stock t ‘underperform’ from a ‘neutral’ rating on the back of this FDA action. The brokerage house says that this could cause a lag in sales revival while another Indian brokerage house expects sales from USA to recover only after some 18 months. There is also growing fear that FDA action might cause UK’s MHRA to also react similarly.
Prior to this, last week, Jubilant Sciences donned the tag of ‘top loser’ when it posted a consolidated net losses for Q2FY15 at 94 crore, blaming it on continued impact of US FDA Warning letter on Spokane facility and adverse price impact on account of new capacities and regulatory changes in China in Advanced Intermediates business.
Two days ago, Wockhardt posted a 98% drop in net profit for Q2FY15 at Rs.4 crore v/s profit of Rs.138 crore in previous Q2 and sales was down 14%. The company, like Jubilant has blamed this on US FDA ban on two of its factories. USA contributes some 60% to its revenue thus this ban has literally debilitated the company.
Ranbaxy has just about managed to post profit this quarter after consecutive six quarters of losses though four of its units continue to face FDA ban on imports. And these numbers were possible only because of the exclusive launch of generic version of Novartis’ hypertension drug brand Diovan in the US. And getting the first mover advantage, Ranbaxy will be the only generic player for a period of 160 days.
Other companies which have come under the scrutiny have been RPG Lifesciences, Orchid, Dabur and these were either for their manufacturing practices or products. Companies like Sun Pharma, Cadilla, Dr.Reddy’s, Glenmark Pharma and Lupin had to recall some of their key drugs from the US market. So over the past few months, Indian pharma companies have been facing increasing heat from the US FDA.
The question is why the FDA is playing the villain? Conspiratory theorists say that this is because the US pharma lobby wants to now protect itself. Indian pharma companies have a 10% market share in US and are the second largest importers of drugs into USA. Thus to reduce this growing clout of the Indian companies and clip their wings, the US FDA has suddenly got vigilant. Conspiratory theories are always interesting and thought provoking but without real proof, by merely putting one and one together, we cannot conclude this being the reason.
Another reason being cited is that the US FDA now has established two local offices in India, one in Mumbai and one in Delhi. Thus with ground staff there, right in the country, the inspections have gone up. The US FDA has implemented Good Manufacturing Practices (GMPs) and that is also the reason why scrutinizes have gone up manifold. But this still means that standards are poor and Indian companies are not US FDA complaint; it is as simple as that.
What could be a more logical explanation is that Indian companies are simply not yet ready for GMP compliance and that being the norm now for US FDA, the mismatch is now happening with increased frequency. As per the GMPs, all instructions are clear, entire manufacturing process is completely defined in a step-by-step format, records are kept of every step taken, facilities are designed to minimize cross contamination and mix-ups and more importantly, all operators are trained. These are stringent but very good standards. BRIC nations are not participating in the GMP Guide for Active Pharma Ingredients. Most GMP companies in India are struggling to meet the compliance cost and companies needing GMP manufacturing in India need to monitor processes and products closely to ensure it is in compliance with US FDA.
In India, there are over 20,000 pharma companies and they do not have very stringent and complex certification procedures. Surely, you would have come across someone around you who does job work or contractual manufacturing of capsules or tablets or bottles for some bigger pharma company. Do you think their facility would be GMP or US FDA compliant? Thus when the tally of all processes and products is taken, discrepancies are bound to arise. Also remember, FDA conducts inspection of only those facilities which export drugs to USA.
The Indian equivalent of FDA in India is Central Drugs Standard Control Organisation (CDSCO). It is the CDSCO which gives approval for drugs to be marketed, patented or distributed. So this means the real problem is that there is a major mismatch between quality standards established by FDA and CDSCO. The basic premise of CDSCO is itself flawed. The motto of FDA is that quality needs to be built into the product and mere testing alone cannot be relied upon. That is why so much importance is given to processes, keeping records and training the staff and operators. In India, CDSCO does not have anything which defines standard quality. The Drug The Controller General of India (DCGI) tests commercial samples following complaints, known as an adverse events, from consumers. The CDSCO publishes a list of products that are tested by the central laboratories, which are found to be “not of standard quality. There is the Schedule M clause in India which governs rejection of products that fail tests but there is nothing as crystal clear as the US FDA law which stipulates processes. Nothing like this exists in India.
Processes and standards matter. ISO series have more than proven that. Records, documents, and final products have to be made transparent or else how will we ever know whether the product has gone through any rigorous checks for quality? The IT industry adheres to global standard processes and products. So why can’t the CDSCO make itself truly global?
The US FDA warnings are good as it will make (hopefully) the CDSCO sit up and take notice and read the writing on the wall – it needs to change! It also comes as a wakeup call to Indian pharma companies where like us Indians, sab kuch chalta hai. More importantly, we as Indians should become more vigilant and try and avoid drugs from companies which are not US FDA compliant. That is a bigger worry.