Drug makers can now expect more regular checkups from USFDA

MUMBAI: Audits of Indian drug manufacturing facilities by the Food and Drug Administration are set to rise sharply after October’s Mutual Recognition Agreement between the US regulator and eight European Union member states.

The pact, seen as an unprecedented move, includes Sweden, Austria, Croatia, France, Italy, Malta and Spain. It allows for recognition of each other’s inspection outcomes and better use of expertise and resources by eliminating duplication. Relying on inspections by EU regulators will allow USFDA to shift resources to other locations, the latter told ETin a statement.

"This will allow USFDA to better identify drug quality problems earlier and prevent poor quality drugs from entering the US market," it said.


While that may lead to increased scrutiny for Indian drug companies — a significant number are already grappling with regulatory compliance — the decision may benefit units with a consistently better track record with EU.

Indian Pharmaceutical Alliance secretary general DG Shah agreed that inspections could be stepped up but termed it a long-term benefit, underscoring the positive outcome of a few recent inspections.

Clearing a growing backlog of pending approvals is also seen as a favorable effect of increased inspections.

A comparative analysis of FDA inspections in EU, China and India shows higher inspection coverage leads to lower rates of manufacturing violations. During 2010-15, the number of FDA inspections of Indian companies more than doubled to 270 from 108, indicating tighter regulatory oversight. Almost a third of facilities in India have never been inspected by the agency, a senior industry official said.

Barring a few exceptions such as Aurobindo, Zydus Cadila and Divis Labs that have seen comparatively better inspection outcomes, the likes of Sun Pharma, Dr Reddy’s Laboratories (DRL), Lupin and Wockhardt are in longwinded remediation processes following warning letters and import restrictions.

Smaller peers are in a similar state. IPCA Labs, Emcure and USV, having exposure to the US markets, have also been slapped with a steady stream of adverse observations.

Effects are noticeable. In one of its worst showings, Sun slipped into losses in the first quarter, ending a 12-year dream run of profits, while others like Lupin and DRL showed a wobbly trend, their market value nearly bottoming out in the medium term. Indian companies account for around 30% (by volume) and about 10% (by value) of the $70-80 billion US generics market, according to a November note the India Brand Equity Foundation (IBEF).

Serious challenges lurk. A report released in July by CARE Ratings shows in FY16, pharmaceutical exports to the US rose 27.8% to $5.5 billion but weakened dramatically the next year to 1.3%.

Crimped supplies from Indian sites due to repeat failures on several counts are cited as a key reason for the sudden nosedive, apart from a shrunken launch pipeline, pricing pressures and a wave of consolidation in US distribution channels. However, compliance records may improve with USFDA routinely stepping in with training workshops in key industry hubs like Goa, Ahmedabad, Chandigarh and Hyderabad. Commitment of leadership teams and investment toward upgrade and automation is also expected to reap benefits, experts said.

Arista to be India Dy Director
USFDA said Thomas Arista will assume the role of deputy director of India office, pending clearances. Arista is regarded as a specialist in auditing units that make injectable drugs. Associated with several India inspections, he’s reputed to be tough but hands-on. USFDA also confirmed Letitia Robinson will be director of the India office (as had been previously reported) and will assume the role once clearances are completed, the agency spokesperson said.