USFDA's warning letters reason to worry for Indian drug makers

On January 23, Mumbai-based IPCA Laboratories informed the Bombay Stock Exchange that its bulk drug manufacturing facility at Ratlam in Madhya Pradesh had received an 'import alert' from the US Food and Drug Administration (FDA). The company, known more for its drug Lariago, one of the largest selling anti-malaria drugs in the country, is not alone.

Look at data from the FDA and the warning letters it has issued in the past couple of years and there are reasons to worry for Indian drug makers. Of the 19 warning letters issued by the office of manufacturing and product quality of the FDA in 2014, seven were issued to Indian companies and one to an India facility of a Canada-based company. Five letters were issued to those in China and one in Hong Kong. This means 37 per cent of the letters were issued to Indian companies. India and China combined accounted for 68 per cent of total letters issued by this office.

Even in 2013, when 21 letters were issued by this office, seven were to Indian companies (or 33 per cent) and this is excluding one to an India facility of a US company. Two of the seven letters were issued to Wockhardt. In comparison, no letter was issued to companies in China and only one was issued to a company in Hong Kong.

On the face of it, for a country that accounts for 40 per cent of the generic drug imports (by volume) of the US and has the second largest number of USFDA-approved plants outside the US - around 300 - a figure of around 30 per cent warning letters may not seem out of line. But then, the argument of big numbers cannot take away the need for Indian companies to introspect and set their house in order.

After all, the FDA had in 2012 indicated that it would conduct inspections outside the US with the same level of rigour as it does for companies within the US, where the inspections are conducted more often. It is also as if Indian companies did not expect the number of inspections to increase outside the US - by some industry estimates, there has been a four-fold increase in these inspections now as compared to before 2012.

There can be no substitute to getting more introspective and constantly looking at ways to upgrade systems and processes that leave no scope for the regulator to find fault with. Ask Sun Pharmaceutical Industries Founder and Managing Director Dilip Shanghvi, on what he thinks of the reports of Indian companies constantly getting warning letters, and he says "this is a journey and different companies will be at different stages of their journey for meeting compliance."

Yes, it is a journey and companies will learn but even without getting into the debate on numbers or into deep introspection, there are clearly areas where Indian companies need to just improve. For instance, they need to be more thorough and investigative of the root causes.

Consider one example, given here only to illustrate a point and not to make any observation on the company. The USFDA after a visit to the Mohali facility of Ranbaxy on September 26, 2012, made an inspection observation (called a 483 in industry lingo) relating to the deviations noticed at the plant.

"A black fiber embedded in a tablet... was likely either tape remnants on the nozzle head of the machine or a hair from an employee's arm that could be exposed on loading the machine. The firm did not conduct any analysis of the fiber to support these root causes. Further, a plan to evaluate whether the corrective actions of trimming the tape and implementing longer gloves for employees were effective was not established," it said.

That was 2012 and a lot has changed in the past two years. Indian companies can ill-afford this any more. Starting January 2015, the USFDA has set up a new office of pharmaceutical quality. Going by the FDA's statements, especially after the high-profile visit of its commissioner Margaret Hamburg to India last year, the office is meant to ensure high quality. More slip-ups by Indian companies will raise questions on their ability to adhere to FDA standards.

Sun Pharma's Shanghvi recently remarked that he has great respect for Indian entrepreneurs to learn rapidly. Let's hope they are listening.