Why India’s generic-drug industry has a long way to go to gain US FDA’s trust
The report of nighttime document-shredding by an Indian pharma firm comes amid speculation that the US may try to reduce its reliance on foreign-made drugs
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Mumbai: One Indian pharmaceutical firm’s nighttime document-shredding and potential manufacturing lapses at two others since December are reigniting concerns that, despite recent efforts, the country’s generic-drug industry still has a way to go to gain the trust of US regulators.
US Food and Drug Administration (FDA) inspectors observed paperwork being shredded at 1am in the document storage area of a factory owned by Hetero Labs Ltd., according to a report on the regulator’s website. Separately, two other drugmakers, including India’s largest, were informed of potential factory violations last month.
The news prolongs a four-year wave of unfavourable reports from the FDA for India’s pharmaceutical industry that have crimped revenue in its largest export market. It also comes amid speculation the US may try to reduce its reliance on foreign-made pharmaceuticals after President Donald Trump indicated after being elected a need to ensure drugs sold in the US are made there. India supplies 40% of the generic medications consumed in the US, where copycats account for more than 8 in 10 prescriptions.
“On the Indian side, they are mindful from a reputation standpoint this is not doing any good,” said Sujay Shetty, head of the Indian pharmaceutical and life-sciences practice at consultancy PwC. “From a supply point of view — for your customers, for the functioning of your business — there’s a lot of disruption you have to deal with.”
Cleaning, not shredding
Footage from closed-circuit cameras showed documents resembling manufacturing and packaging records were being shredded at the Jadcherla factory of Hetero Labs in India’s Telangana state, the FDA said.
The closely held company told inspectors that the tapes showed workers cleaning, though officials weren’t able to explain why the shredder was installed or why the work began fours days before FDA inspectors arrived, the regulator said in its report, called a Form 483. A company is generally given a period of time to respond to the observations in a Form 483 before the regulator determines if actions need to be taken.
Phone calls and e-mails to a Hetero spokesman requesting comment on the FDA’s observation weren’t returned.
“When the FDA finds that manufacturers lack sufficient controls over the integrity of their data, or worse, when firms intentionally violate such controls, those manufacturers’ practices raise questions about the accuracy, reliability, and truthfulness of all the data and information they collect and report,” said Lyndsay Meyer, a spokeswoman for the FDA, in an e-mailed response to a question about the shredding activity noted at Hetero Labs. “While some Indian companies meet US product quality standards, others do encounter problems and operational challenges.”
The Indian pharmaceutical industry’s explosive growth over the past decade has made the nation host to the most FDA-approved plants outside the US. The regulator has increased staff in India in recent years, facilitating an inspection blitz that uncovered violations at multiple companies — ranging from deleted data to unsanitary conditions — and resulted in regulatory sanctions, including import bans.
Since then, months of costly remediation efforts have some company executives signalling they are ready to invite inspectors back to see whether sanctions can be lifted. That’s sparked more general optimism the industry can move past its bout of regulatory troubles. December’s inspection results have dimmed that prospect, sending an index of Indian pharmaceutical stocks down 7% since 1 December.
“There was a thinking that, now the 483s and the warning letters are behind us, we can move on,” said Siddhant Khandekar, an analyst who follows the Indian pharmaceutical industry at ICICI Securities in Mumbai. “You can’t take the US FDA for granted.”
Still, the latest string of reports only covers a fraction of the 584 companies and sites registered with the FDA, many of which have made a lot of progress bringing facilities up to regulatory standards, said Khandekar.
India not alone
The problems the FDA has found at Indian manufacturers are similar to those found around the world, and the regulator will work with companies to correct them, the FDA’s Meyer said.
An FDA inspection of a Sun Pharmaceutical Industries Ltd. plant in Halol, Gujarat state, resulted in a 14-page report of potential violations ranging from inadequately designed drug tests to irregular reporting of failing results or potential contamination.
The observations, made during a visit that ended on 1 December, don’t automatically result in new sanctions. Still, the Halol facility was issued a warning letter by the FDA a year earlier that prevents new products from entering the US, damping revenue growth in the market where Sun Pharma, India’s largest drugmaker, gets half its sales.
None of the FDA’s recent observations were repeats of the violations that sparked the warning letter, Sun said in a statement dated 8 December, but it must take steps to address the new observations to get the original warning letter lifted. The measures will add to a remediation process that’s taken almost a year and Mumbai-based Sun has blamed for slimmer profits.
“We are working towards promptly implementing corrective actions and improvements that are necessary as a result of the observations and will continue to work with US FDA,” said Frederick Castro, a Sun Pharma spokesman, in an e-mail.
The same day the results of Sun’s inspection came out, another Indian drugmaker, Divi’s Laboratories Ltd., said the FDA had noted several potential violations at one of its plants in Visakhapatnam, in Andhra Pradesh state.
Divi’s shares fell as much as 6.2% on 8 December, a day after the company announced the inspection results. Two weeks later, an analyst who said he had seen the FDA’s original report, which hasn’t been made public, e-mailed clients to say that the potential violations were serious. That prompted Divi’s stock to fall 22% — the biggest one-day drop in the company’s history.
The company said on 7 December that it’s responding to the FDA’s concerns and so far no sanctions have been announced. Still, the shares have fallen further, and have lost almost half their value since closing at a record Rs1,342.60 on 16 September. A Divi’s spokesman didn’t respond to an e-mailed request for comment.
Results of Hyderabad-based Hetero’s inspection were released on line following a US Freedom of Information Act request. Aside from the video of the document shredding, Hetero is being asked by the FDA to explain observations that it failed to properly document production processes or investigations of complaints about the firm’s products, according to the regulator’s report.
More insight into the compliance of India’s pharmaceutical companies will come when the FDA evaluates the companies’ responses to its reports, and the results of inspections of three plants owned by Dr. Reddy’s Laboratories Ltd., India’s second-largest drug maker, which are already subject to a warning letter.
The FDA will re-inspect the facilities by 31 March, the company said in a presentation at the J.P. Morgan Annual Healthcare conference in San Francisco earlier this month. Bloomberg