Companies like Sun Pharma and Dr Reddy's under USFDA lens, domestic drug firms may face more scrutiny

MUMBAI: Domestic drug companies will face increased scrutiny from global regulatory agencies, including the US Food and Drug Administration (USFDA), with the top two companies Sun Pharma and Dr Reddy's now under regulatory glare. Sun Pharma joined the long list of companies last week against whom warning letters have been issued this year, while in November the USFDA raised concerns on Dr Reddy's manufacturing practices at three plants.

A total of seven companies have been issued warning letters this year by the US regulator, raising issues of manufacturing lapses at their facilities in India. Indian companies will continue to be under FDA observation, with a higher number of inspections. "This (warning letter) is a cause of worry as serious manufacturing lapses have been pointed out by the regulator," says Sujay Shetty , leader (pharma), PwC India, says. At present, 38 40 investigations are on at more than 25 companies.

India accounts for around 30 per cent (by volume) and about 10 per cent (value) in the $70-80 billion US generic market. "Now there's increased pressure on domestic companies, and an intense scrutiny from the US FDA and other regulatory agencies globally , post two large companies having come under FDA action.We will need to perk up," says an executive working with a large industry player.

Usually, the regulator's action has an adverse impact on the company for a few quarters. But analysts say most companies are able to resolve the issues over two to three years. An analysis of the period 2009-12 suggests domestic companies received 13 warning letters, of which eight (61 per cent) were resolved, with six of those being resolved within two years.

Domestic companies have been quick to devise strategies by reducing dependence on the affected facility, says Sarabjit Kour Nangra, VP (research-pharma), Angel Broking. Sun Pharma, for example, re ceived an FDA approval to launch the generic Gleevec with market exclusivity from another US subsidiary .

DG Shah, secretary general, Indian Pharmaceutical Alliance, says, "We are in dialogue with the USFDA to train our companies to meet the specified norms. What US and Europe faced 10 years back, India is facing now . There is no issue with product quality with domestic generic drugs, but what needs to be followed strictly is documentation and processing at the manufacturing facilities."