India’s ailing pharmaceutical industry needs a cure

In banning the manufacture of a whole range of drugs, the Indian government has thrown the industry into complete disarray. A hearing on Monday offers some hope, but regulation is the key to recovery.

A scientist performs chemical tests at a research and development laboratory. The Indian government estimates the country could have a $300 billion pharmaceutical industry by 2030. Scott Eells / Bloomberg News
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A ban on hundreds of medicines in India because of concerns over health risks has brought into focus the drastic need for tighter regulation of the country’s multibillion dollar pharmaceutical industry.

India’s government this month put a ban on the manufacture and sale of more than 340 fixed dose combination drugs, resulting in major pharmaceutical firms including Pfizer’s Indian division and Cipla taking the case to Delhi high court in an effort to overthrow the move.

This challenge has resulted in a stay on the ban until the next hearing, which is due on Monday.

Fixed dose combination drugs include two or more active drugs in one product, and include medicines ranging from cough syrups to antibiotics.

The dispute highlights regulatory issues that need to be addressed. If the ban is upheld, it will have a negative impact on the pharmaceutical industry in the short term, but it would be for the long-term good of the sector, analysts say.

“This would be a setback to the pharma industry in terms of sales,” says Karnvir Mundrey, the director of Atharva Lifesciences Consulting, based in Bangalore.

“The greater setback may be in the form of confidence. These drugs have been previously sold over the counter with the permission of the government and agencies. Thus it may cause a rethink in long-term pharma and sales strategy for these companies.”

But Mr Mundrey says that “the government’s decision to ban certain fixed dose combinations is a positive move in the pharmaceutical industry. These drugs are known to cause certain types of drug resistance – and risk to the patient. Of course we need better regulation”.

India’s pharmaceutical industry is ranked third globally in terms of volume and 13th in value, accounting for 10 per cent of production worldwide, according to a report by The Associated Chambers of Commerce of India (Assocham) and Yes Bank. It says that the industry in India is expected to grow to $48 billion by the financial year between April 2017 to March 2018, expanding at a compound annual growth rate of 14 per cent.

India’s pharmaceutical industry thrives on the production of cheap generic drugs, which are copies of off-patent medicines. India is estimated to produce one-fifth of generic medicines globally.

But there have been a series of issues in recent years that have called into question the standards of the country’s pharmaceutical industry.

The United States food and drug administration (FDA) in 2013 placed bans on two factories in India operated by the Indian drugs firm Wockhardt, because of concerns over production quality. These were the drug maker’s main plants for exports to the US.

The matter has still not been resolved, resulting in a huge drop in business for Wockhardt, given that the US accounted for almost half of its global sales. The drug maker is trying to get clearances to export to the US from its Shendra plant in the state of Maharashtra, west India, but an inspection of the factory by the FDA in January raised a series of issues which would need to be addressed before the plant could supply the US. The FDA has banned more than 40 pharmaceutical plants in India in the past few years.

The Indian drugs firm Ranbaxy Laboratories three years ago had to pay a record fine of US$500 million for lying about its methods of testing medicine and for manufacturing substandard drugs.

Swapan Kumar Jana, the additional director of R&D and manufacturing at the Serum Institute of India in Pune, says the government’s move to prohibit fixed dose combination drugs is justified and that “the pharma sector needs to be better regulated”.

“India has been selling these drugs for a long time because of a nexus between government and pharma companies,” he says. “The immediate effect is on revenue loss followed by sliding of stock prices. Also, stress on the management to expand their market share with other products and increase product portfolio to compensate the revenue loss.”

KK Aggarwal, the honorary secretary general of the Indian Medical Association says that the negative impact on sales would be limited if the ban is upheld because the drugs could still be bought independently of each other, just not in their combined form.

In the case of fixed dose combinations, “when drug A and B are combined, they are not AB but become a new drug C. Therefore the new drug requires a clinical trial and permission from Drug Controller General of India [DCGI]”, he explains.

Dr Aggarwal adds: “We at IMA are concerned about the safety and quality of [drugs] which needs to be regulated and monitored by the regulatory body which is DCGI in India.”

Speaking at a seminar on the pharmaceutical industry last month in Mumbai as part of the “Make in India” week, Dilip Shanghvi, the managing director of Sun Pharmaceuticals, said that India’s regulatory framework should be strengthened to be brought in line with international practices.

“I see India as a potential pharmacy hub for the world,” he said. “If we make a few changes in the way we do and manage business in India, we can accelerate that process.”

V K Subburaj, the Indian government’s secretary of the department of pharmaceuticals, ministry of chemicals and fertilizers, at the same event said that the industry had problems that needed to be addressed, but added that he was confident that India could have a $300bn pharmaceutical industry by 2030.

“This is a herculean task, but possible,” says Mr Subburaj. “We should reach this level.”

Aditya Berlia, of the Apeejay Stya Group, a family run industrialist and investment house in New Delhi, with interests in the pharmaceutical sector, explains that as India tries to position itself as a business-friendly destination, he objects to how the government introduced the ban on fixed dose combination medicines without notice.

“It would have been much better if they had taken their time and gone through an appropriate procedure before taking this action,” Mr Berlia says. “That could have been giving a 60-day waiting period or having consultative meetings with the medical community to really address all the concerns of patients, doctors, and pharmaceutical companies, instead of suddenly taking this action one day. There needs to be better communication between the regulators and the pharma companies in a consistent manner.”

He adds that moves such as these are having a negative impact on the investment climate of the industry.

“I think between these sudden actions, as well as the government’s continuous drive for price controls, it’s a chilling effect to the local pharma industry and sends a message that perhaps India is not the best place to expand right now.”

Mr Mundrey says that India’s drug authorities “face a complex situation” and have a challenge on their hands to control the industry

“On the one hand they are faced with a variety of medical claims and research each year,” he says. “On the other hand. India is a complex country with a variety of population types in terms of income, gene pool and needs. The positive aspect of the process is the realisation in the global community that while India may have challenges in terms of its pharmaceutical industry – it is on the pulse of global research and is proactive in implementing it in India.”

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