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Vaccine industry faces global derecognition

Vaccine industry faces global derecognition
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First Published: Fri, Aug 01 2008. 12 11 AM IST

Updated: Fri, Aug 01 2008. 12 11 AM IST
Bangalore: The Indian vaccine industry, which generated Rs3,265 crore in revenue in 2007-08, of which 58% came from exports, is potentially two months away from global derecognition because its regulator hasn’t complied with global norms.
This state of affairs has resulted in significant amount of uncertainty in the still-young industry here. “We have our fingers crossed and are waiting for the National Regulatory Authority, or NRA, to be approved by the World Health Organization (WHO),” says K.I. Varaprasad Reddy, chairman and managing director of Shantha Biotechnics, which shot into the limelight in 1997 when it created the country’s first recombinant vaccine (one created by recombining genetic material) in 1997, for Hepatitis-B, at a price that was then one-tenth the global one.
A WHO approval is critical because Indian firms are big suppliers to the United Nations agency, accounting for between 60% and 80% of the vaccines it buys every year.
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NRA, headed by the Drug Controller General of India, or DCGI, is the apex body monitoring the vaccine sector, and has come under WHO’s scanner for not implementing Good Manufacturing Practices (a set of standards that indicate a certain level of quality in the process and the product), and other global standards in Indian units. In fact, at WHO’s insistence, the government closed three public sector units in January, but it appears the malaise runs deeper.
“New vaccines from India are not being pre-qualified for large agencies like the Unicef, Pan American Health Organization, Gates Foundation and others, which consider WHO pre-qualification as a quality assurance at the country level,” says a WHO official close to the development, who did not want to be identified.
The industry is aggrieved because WHO is not even accepting “any files and documents for consideration”, says Cyrus S. Poonawalla, chairman of Pune-based Serum Institute of India, the country’s largest vaccine manufacturer. “If the government does not implement this by the October 2008 deadline that WHO has set after a lot of correspondence, there is a possibility that NRA in India can get disqualified.”
Drug controller general Surinder Singh didn’t respond despite several calls and faxes to his office. However, in a July interview with Mint, Singh had said he was collaborating with his counterpart office in Canada, called Health Canada, for strengthening the vaccine regulation in India. Several officials from his office had travelled to learn of “their systems and processes”, Singh said, admitting WHO was concerned about India’s regulatory system.
NRA’s “disqualification” will be a big blow for firms supplying to international immunization programmes; for others, which collectively export to more than 100 countries, India’s image is taking a beating, and that could be “disastrous for international trade”, according to Shantha’s Reddy.
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The WHO official concedes some efforts are afoot within the government to address this situation.
Pricing problems
An ineffective NRA that threatens the industry’s global future isn’t the only problem firms such as Shantha and Serum Institute face. The procurement and pricing of vaccines here remains caught in a policy warp. The industry claims the government ignores manufacturers’ tender bids and correspondence for months, and then places orders, at “unreasonable terms” at the eleventh hour when a shortage looms.
The government is not willing to pay more than Rs1.50 for a dose of DPT vaccine (used to immunize children against diphtheria, pertussis and tetanus), which fetches Rs5 in the open market and Rs10 from Unicef, says Poonawalla. He says it is this unfair pricing that forced state-owned vaccine makers to turn unprofitable and supply vaccines “using sub-standard material”.
“This has been happening for a long time, but it took WHO to draw attention (to quality),” says Shrikumar Suryanarayan, director general of industry body Association of Biotech Led Enterprises, or ABLE, and former head of research, Biocon Ltd. All these years India did not have to pay the price of innovation (because, in the absence of intellectual property protection laws, local firms could just copy medicines), and because of this there’s neither any process of innovation nor does the government realize the value of risk associated with innovation, he argues.
This year, the industry has agreed to supply vaccines for the national immunization programme at subsidized rates, but there’s already a consensus building that they would resist the old, unsustainable price next year.
“The price of rice has gone from Rs20 to Rs32 a kg; how can you expect life-saving drugs to remain at the same price?” says Reddy. His grouse is that economically weaker countries such as Pakistan, Bangladesh and Sri Lanka procure vaccines from Indian firms at a price better than what the Indian government offers.
Bureaucratic ills
Globally, every time a drug falls short of promise or throws up unexpected side effects, it’s the regulatory body that cracks the whip on the pharma industry. In India, though, there’s no feedback system and no strong regulatory regime, says Suryanarayan.
For instance, it took Shantha eight years to get a label corrected in Indian Pharmacopeia, a government-maintained directory of drugs sold here, from wrongly registered “plasma derived vaccines” to “recombinant vaccine”.
This mistake, says Reddy, cost him dearly in his exports.
If there was any preparedness within the government, say experts, some kind of predictive modelling could be used to estimate what diseases could surface in five years and matching stockpiling efforts could be undertaken. “The industry could then distribute the job and not duplicate efforts. But, the government has no rescue plan,” says Krishna M. Ella, chairman and managing director of Bharat Biotech International.
A vaccine renaissance
The industry’s problems come at a time when the sector has been seeing a revival that goes back five years. Globally, vaccine sales are growing at 16.5%, compared to the 6.4% growth of the pharma sector, according to market research firm RNCOS, and will cross $21 billion in sales by 2010.
Margins on vaccines are sliver-thin and the business saw a decline in innovative products in the mid-1990s. Things changed after pharmaceutical firm Wyeth’s successful pneumonia vaccine in 2000 and the anthrax scare in the US after 9/11. Advances in genomics and molecular biology have not only led to new combination jabs for infants but even adult vaccines. In recent years, says Suryanarayan, it has started emerging that many diseases, such as cancer and type I diabetes, are amenable for vaccines.
Big pharma, including Merck and Co., Aventis Pasteur, and GlaxoSmithKline Plc., which had shunned vaccines for a long time, is now revelling in increased sales from vaccines. GSK, which has one of the broadest vaccine pipelines in the industry, has had double-digit growth.
“Our vaccine sales have doubled in five years, (from) £1,080 million in 2002 to £1,993 million in 2007,” says Sarah Sheppard, vaccines communications director, developing countries and Asia-Pacific, GSK, in London.
In contrast, growth in the Indian vaccine industry declined from 23.3% in 2005-06 to 7% in 2007-08, according to data from ABLE and trade journal BioSpectrum. “Government policy is killing innovation,” rues Reddy.
In a country where, according to Global Alliance for Vaccines and Immunization, more than 10 million children are not immunized, it is unlikely that vaccines for adults, which need a different approach, will succeed. Vaccines for long-term illnesses such as diabetes and cancer may not garner enough attention as this requires a public health system that learns to handle new technology as well as a new population.
“We’ll again wait for some international agency to think policy for us,” says Ella.
Bhuma Shrivastava in New Delhi contributed to this story.
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First Published: Fri, Aug 01 2008. 12 11 AM IST