Failure to meet USFDA compliance can endanger Indian pharma companies' US generics business, new report warns

Failure to qualify for the stringent United States Food and Drug Administration’s (USFDA) compliance has adversely impacted the prospective businesses of Indian pharmaceutical companies that focus on the US generics, showed a recent report by financial services company Motilal Oswal Financial Services Limited.

Recent instances of import alert have intensified the regulatory risk significantly on the ongoing base business in the US market. Interestingly, the timeline for the escalated action by the USFDA has shortened considerably adding further risk to the US generics business, cautioned the report.

As per the report, the unsuccessful USFDA compliance has led to Official Action Indication (OAI) or issuing of Warning letter (WL). There has been a rising pace of the USFDA inspections across the US/India as well as increased level of OAI citations at Indian sites, something that should worry Indian pharma companies which are focused on the US market.

There were around 60 OAI citations at Indian sites over November 2019 to November 2022. Particularly, in the past 12 months, five OAI classifications have been issued, of which two have been escalated to import alert.

The import alert implies that a company would not be able to supply products from this site to the US market, until the facility becomes compliant, while the regulatory actions of OAI/WL effectively results in the ceasation of new approvals from the site. Additionally, import alert stops the existing businesses as well, subject to exemption of certain products.  

“Overall, risk to the US generics business remains elevated. The successful product review as well as approval should be supported with robust compliance requirement for better visibility and consistent growth in the US generics segment,” said Research analysts Tushar Manudhane and Sumit Gupta.

The latest instance is that of Sun Pharmaceutical Industries where USFDA listed the drugmaker's facility in Gujarat's Halol under an import alert. Halol is the second instance, wherein, the OAI classification has been escalated to import alert over past six months by the USFDA.

While the OAI classification is issued in approximately 90 days post-USFDA inspection, the timeline of regulatory action has reduced considerably. For instance, Glenmark Pharma's Baddi site was inspected in June 2022 and was issued an import alert in October 2022. Even its Halol site was inspected in May 2022. Subsequently, it was issued OAI classification in August 2022. Recently, it was issued an import alert within six months of USFDA inspection, Motilal Oswal noted.

“In addition to reduction in business in the US, the USFDA adverse action does have repercussion on the exports to other geographies as well from the same site. For instance, import alert at Ipca’s site in March 2015 had triggered action from WHO-Geneva as well and reduced the institutional anti-malaria business to Rs 1.2 billion in FY16 from Rs 4.4 billion in FY14,” Manudhane and Gupta noted in the report.

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