Pharma companies unruffled by USFDA fee hike; want faster drug approvals instead

The fee hike announced by the US Food and Drug Administration (USFDA) for a generic drug approval (for an existing licensed drug), which is called Abbreviated New Drug Application or ANDA, seems to have had little impact on the Indian pharmaceuticals industry.

The increase is to come into effect from 1st October and the rise seems almost immaterial to many. The current increase - at 30 per cent - may look large if seen in percentage terms but in absolute terms, it amounts to an increase of around $20,000 per ANDA.

Considering that in the best case scenario, a typical leading Indian pharma company would file a maximum of 15 to 20 ANDAs in a year, it translates to a total increase of around $400,000 for 20 filings.

In fact, the new fee in all would totally amount to $1.5 million, which really is not much for leading Indian pharma companies with revenues of over $2 billion.

The pertinent point here is that almost 75 per cent of total pharma exports from India in terms of value happen from 10 to 12 such leading Indian pharma companies - the likes of Sun Pharma, Lupin, Dr Reddy's, Cipla, Zydus Cadila or Aurobindo.

Therefore, while no company wishes to be quoted on anything to do with the US regulator, the point is clear through conversations with some of them that the issue is not really about any hike in fee. In fact, one senior pharma official treated it as par-for-the-course and said "this is routine and not material really".

However, most had worries elsewhere. The bigger pain is in delays in getting new product approvals from the USFDA. "If the FDA can address the issue of delay in approvals, that can give a much bigger upside for the Indian pharma companies," says an official of another pharma company pointing out that on an average it now takes 42 months to get an approval, against 24 months about three years ago.

A faster approval cycle, therefore, is more critical. One could still argue that this fee hike will impact smaller companies but then, this is one subject where it is a call that each country would want to take. For instance, as a senior industry representative summed up: "It is the  prerogative of each country to decide. It involves lot of considerations such as impact on level of competition, the cost of generics to the US citizens, burden of applications and staffing."