New Delhi: Indian drug makers that have created a niche in the global market with cheap copycat versions of off-patent medicines are concerned about the fallout from a US investigation of Ranbaxy Laboratories Ltd for alleged fraudulent conduct.
Industry representatives said the case will not only “embolden” the anti-generics lobby that has been campaigning against cheap drug versions but, it may also cause the entire Indian drug sector to be viewed with caution at best and suspicion at worst by medical professionals globally.
Ranbaxy, India’s largest drug maker, insisted that no charges had been filed against it in the US, the world’s biggest market for pharmaceuticals by value, and the top destination for Indian drug exports. In 2007, Indian pharmaceutical firms exported Rs28,000 crore worth of drugs globally, a quarter of it to the US.
The Star Ledger, a newspaper published from New Jersey, reported on 12 July that US federal investigators on 3 July filed a motion in the US district court in Maryland against Ranbaxy for allegedly falsifying records, that led to the sale of generic drugs in the US that did not meet the country’s quality standards.
On 13 July, Ranbaxy denied the charges, calling them “baseless”.
“No prosecution has been initiated,” a Ranbaxy spokesman said. An investigation has been under way for about three years but “no charges have been filed,” he noted.
Over the weekend, Mint was unable to independently ascertain whether there has been any motion in the Maryland court.
The Food and Drugs Administration, or FDA, the US drugs regulator, has tested 200 random samples of various products marketed by Ranbaxy in the US and found them complying with all the specifications for those drugs, according to the spokesman.
Under scrutiny: Ranbaxy Laboratories Ltd’s research headquarters in Gurgaon, Haryana. The company insisted no charges had been filed against it in the US, the top destination for drugs exported from India.
Ranbaxy’s managing director Malvinder M. Singh diverted all queries to the company spokesperson. The spokesman, in turn, declined to comment on any communication Ranbaxy management might have had on the issue with Tokyo-based Daiichi Sankyo Co. Ltd, which is buying out the 34.8% stake of the Singhs for almost Rs10,000 crore in a deal unveiled last month. A Daiichi spokesman didn’t immediately respond to a Mint questionnaire emailed early on Sunday.
“The incident is very unfortunate for the Indian generics,” said D.G. Shah, secretary general of Indian Pharmaceutical Alliance, an industry body of top Indian drug makers, including Ranbaxy, adding that he was worried it would “create reputational issues” for the sector.
Pressure could come from two sources, Shah said. One, from patented drug makers, who will gain if quality concerns are raised about cheap generic drugs, and, two, generic pharmaceutical firms from European or West Asian nations.
A senior executive at a Ranbaxy competitor spelt out the the concern more clearly.
“The charge will boil down to (that of) misbranded and spurious drugs. This is a big, big blow to Indian generics as people will start questioning the safety or efficacy of all Indian drugs,” he said, asking that neither he nor his company be identified.
China is already viewed with suspicion in the US since batches of contaminated heparin raw material that killed 149 people in US, were traced back to the nation. Heparin is a blood thinner.
“Now we will all be painted with the same brush for no fault of ours,” said a senior executive at another Ranbaxy competitor.
Ranbaxy and other Indian drug makers have been under the US regulatory scanner for several reasons for some years now. In 2006, Ranbaxy’s Paonta Sahib plant in Himachal Pradesh was inspected by FDA officials over compliance issues and is awaiting the final results of that inspection.
In February 2007, officials of the US department of justice conducted a surprise raid on Ranbaxy’s New Jersey offices and took away unspecified documents.
Earlier this year, two of Ranbaxy’s factories, in Dewas in Madhya Pradesh and Batamandi in Himachal Pradesh, were also inspected by FDA, though it is unclear if the moves were related or not.
As part of its concerns over sourcing raw material for drugs and importing pharmaceutical products from India, China and other countries, FDA set in motion what it calls a “boots on the ground” initiative to increase monitoring of US-approved manufacturing sites across the world. The regulator plans to set up an office in India.
On another front, the US Federal Trade Commission in a May report expressed concern over generic drug firms increasingly settling patent lawsuits with large multinational peers that delayed availability of cheaper generic drugs to US citizens.
The commission indicated it was going to keep an eye on all possible anti-competitive arrangements, without naming any manufacturer.
Ranbaxy has settled five patent lawsuits out of court with the patent holders in the last year-and-a-half with the largest being with Pfizer Inc. on the $12.7 billion(Rs54.610 crore) cholesterol drug, Lipitor. In 2007, Ranbaxy earned $386 million, or nearly a quarter of its overall revenues of $1.61 billion, from exports to the US.