Thursday, June 6, 2013

RANBAXY’s $500mn settlement with US regulators – An Overview

Probably there is not much love left in western European and North American capitals towards Indian Pharmaceutical companies. Reasons are plenty. Most of those countries have their own mammoth pharmaceutical companies, whose interests are not aligned with the rise of Indian generic manufactures and Indian Patent regime- which according to their accusations are not strict enough.

Western Pharma majors are facing three major challenges from India. Firstly, India's patent regime. Indian government, court and regulators won’t hesitate in taking out the fantastic weapon called - compulsory licensing in cases of life saving drugs. Companies may not get patent in India, if their application running (or alleged to be running) on top of a horse called ever greening.

Secondly, Indian manufactures can make generic medicines which costs much less than that of foreign companies. This will make the competition in Indian market in favour of domestic generic companies. Thirdly, in foreign countries, like countries in Africa, Europe, Americas etc, Indian companies are creating much bigger footprints (with affordable medicines). This essentially (if not now, then in future) eating the margins (in generics) of many western Parma behemoths. In a world where money is in short supply, affordability (of drugs) is the name of the game. Western pharma companies, to an extent correctly, complain that they are the ones who invest in costly research, long drawn clinical trials etc.

It is to be noted here that, a huge amount of research output is coming from big universities as well, which again is publically funded.

Ranbaxy Case

However, recent settlement in Ranbaxy case is indeed a setback for India generic majors. According to NYT, "Ranbaxy pleaded guilty on Monday to federal drug safety violations and will pay $500 million in fines to resolve claims that it sold subpar drugs and made false statements to the Food and Drug Administration about its manufacturing practices at two factories in India"

"The company acknowledged that it failed to conduct proper safety and quality tests of several drugs manufactured at the Indian plants, including generic versions of many common medicines, like gabapentin, which treats epilepsy and nerve pain, and the antibiotic ciprofloxacin."

It is to be noted here that, "F.D.A. said it did not receive any reports of patients being harmed by the drugs made at the plants in question" - NYT.

Ranbaxy is not the only company facing problems related to quality, some western companies are also on the radar.

Indian Pharmaceutical Sector

Parma is big sector, we already have considerable market share here. According to Ministry of Commerce, GOI, India is,

1. 4th in the world in terms of production volumes;
2. 12th in terms of export value of bulk actives and dosage forms;
3. Largest exporter of formulations in terms of volume with 14% market share.

Major export destinations are USA followed by UK. In terms of Exports we registered a growth of 22.78% in 2011-12 and 10.55% in 2012-13.

What Ranbaxy case point out is Indian companies need to be more careful in manufacturing medicines. Medicines are something which directly affects the heath of consumer; any lapse on this front not pardonable. Moreover, these incidents will create a bad impression about Indian generic majors among foreign countries, even though it is not factually correct to label medicines manufactured in India as substandard, dangerous for health etc.

In future, government, Indian regulators, manufactures have to be more careful. We should take this penalty as a challenge and put a stricter regulatory framework in place, stricter quality control regime, implement best practices, more inspectors etc. At a moment, when we are asking Chinese, Europeans to widely open their market for Indian pharma, there should not be any lapse from our end.


PS: At least in one case - generic Lipitor - FDA traced the problem back to one of the Ranbaxy manufacturing plant in India. Why Indian regulators didn't find this out earlier?




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