EU ban not a financial but a reputation hit for GVK BIO

In response to the European Union's just announced ban imposed on the marketing of around 700 generic medicines on grounds of alleged manipulation of clinical trials conducted by GVK Biosciences, the company, GVK BIO in quick speak, has in a statement mailed to Business Today, says: "Despite all the evidence/data presented, the European Commission has moved ahead making the European Medicines Agency (EMA) recommendation into law.  GVK BIO is disappointed with the fact that even after multiple appeals, a deeper scientific dialogue was not undertaken. GVK BIO will continue to work with the Government of India and our customers to help resolve this."  
 
Giving a background, it says, "in January 2015, the EMA made a recommendation about products that were tested at one of GVK BIO's Clinical facilities (Clinogent - Hyderabad), based on an audit conducted by the ANSM (French regulatory agency) in May 2014. Today's announcement is about the same matter - the European Commission has drafted a law that will require member countries to implement the EMA recommendation. Most regulatory agencies in Europe had already taken action in their respective countries in December 2014 and January 2015.  Based on today's developments, a few EU countries that may not have implemented the EMA recommendation will now be required to do so."
 
It also says "since January 2015, several pharmaceutical companies had independently challenged the EMA recommendation." And also, "the Government of India (which conducted its own assessment through the Drug Controller of India) met with the various authorities in Europe to express their concern on their decisions. The Government of India and GVK BIO opened dialogue with various regulatory agencies in Europe and presented more data from eminent cardiologists as well as data from Company's internal investigations.  The evidence/data presented showed different conclusions than those of the findings of the ANSM audit of May 2014."  
 
On the impact on the GVK BIO business, while the move is bound to be a reputation hit for the company, the impact on the financials may not be much. Responding to a question from Business Today on the size of this business of clinical and bio-equivalence studies and the impact of the EU move, a company official says, it used to contribute to about one tenth revenues at around $10 million or around $60 crore and much less now (though the exact numbers are not available) and has around 300 employees out of the company's total staff strength of 2500 employees in all and around $ 100 million revenues (around Rs 650 crore) revenue in all. Its current growth drivers are contract manufacturing, biologics and other businesses.

The GVK BIO statement also adds: "Other regulatory agencies including the USFDA and the same regulators from EMA/ANSM who visited GVK BIO in  Sept 2014 and Nov 2014 did not express concern on ECGs (Electro-Cardiograms) for studies done in the same period as those audited in the May 2014 inspection.