Indian drug makers wary as US FDA sharpens focus on quality control

The US FDA has increased the frequency of its inspections but also intensified scrutiny on drug manufacturing facilities in India


Companies are now being pulled up for lapses such as inappropriate clothing of employees, improper washing conditions and inadequate lighting. Photo: Bloomberg 
Companies are now being pulled up for lapses such as inappropriate clothing of employees, improper washing conditions and inadequate lighting. Photo: Bloomberg 

Mumbai: Indian drug makers are finding that it’s not enough to just tick the boxes on the quality control front but be fanatic about every tiny aspect to meet the US drug regulator’s elevated expectations.

The US Food and Drug Administration (FDA) has not only increased the frequency of its inspections but also intensified scrutiny on drug manufacturing facilities in India.

Companies are now being pulled up for lapses such as inappropriate clothing of employees, improper washing conditions and inadequate lighting apart from issues relating to data integrity, batch failure investigations or improper quality control systems. 

“The issues raised point that FDA is getting into tremendous level of details and, more importantly, looking to inculcate a much more proactive approach in firms towards ensuring product quality,” Vishal Manchanda, an analyst at Nirmal Bang Securities, said. The US is Indian pharma’s biggest market.

In the past six months, plants of drug makers including Sun Pharmaceutical Industries Ltd, Dr. Reddy’s Laboratories Ltd, Lupin Ltd, Aurobindo Pharma Ltd, Glenmark Pharmaceuticals Ltd, Cadila Healthcare Ltd and Biocon Ltd underwent an audit by US FDA and were issued Form 483, listing observations related to violation of so-called good manufacturing practices (GMP). 

According to the FDA database, inspections of Indian manufacturing facilities rose to 290 in 2015 from 108 in 2009. India has a total of 572 USFDA-approved plants currently, compared with 433 in 2013. 

The rise in inspections comes in the backdrop of the Generic Drug User Fee Act’s (GDUFA) implementation in the US in 2012 which sought to hasten generic approvals and eliminate disparity in inspections of US and foreign manufacturing facilities. One-fifth of FDA inspections happen in India and China currently, up from 11% in 2012, said Edelweiss Securities in a February report.

FDA has also made other changes. It has cut prior intimation time for plant inspections to as little as 24 hours from 25-30 days. Inspection frequency has increased to once or even twice a year, compared with once in two-three years earlier.

“The big shift we have observed in the US FDA’s mindset over the last few years has been the shift from a plant by plant focus to more of a network view. It is trying to get comfortable with the robustness of the entire plant network,” said Vikas Bhadoria, a senior partner at consulting firm McKinsey and Co.

“Its objective is to understand whether the overall operating system in the plant network is robust or not. When it has observations related to a specific plant, it expects the organization to assure it that the challenge has not only been tackled at that specific plant but also pro-actively dealt with across the network,” Bhadoria said. 

The Edelweiss report noted that since GDUFA, 55% of the warning letters issued by FDA were to facilities in India and China, and that most of them have not been resolved yet. 

In an official blog uploaded in March, Mary Lou Valdez, US FDA’s associate commissioner for international programmes, said quality issues are an ongoing challenge for the Indian pharma industry and in order to fully realize the nation’s potential, India’s regulatory infrastructure must keep pace to ensure global quality and safety demands are met.

Quality remediation, however, is expensive.

“The cost of strengthening operations and network infrastructure works out to 5-10% of cost of goods sold. However, these day-to-day remediation costs can be dwarfed by the full cost of poor quality. Remediation-related interventions can lead to 20% or more long-term unit cost increase due to additional manpower, process and infrastructure changes, etc. Also, revenue losses can reach up to 20% of company’s sales,” said Bhadoria. 

The regulatory overhang is likely to persist as over the next three years, US FDA will inspect the pending 190 Indian facilities which it hasn’t audited in the past five years, Edelweiss said. The BSE Healthcare Index has shed 7.2% in the two years to May against a 10.8% gain for the benchmark Sensex. 

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