Cost of Compliance

Indian drug makers are scrambling to raise the bar in manufacturing quality even as the country’s top regulator step up efforts to bolster surveillance machinery to ensure global good manufacturing practice (cGMP) standards and safeguard the quality of the products.

The hectic activities come as a response to check any possible gaps in stringent manufacturing quality standards required by the world’s leading pharma markets. An increasing number of exporting companies from India have received warning letters from the U.S. FDA of late. A few of the companies suffered huge losses too as the U.S. regulator slapped import bans on their facilities for repeated deviations from the stipulated quality norms.

Any such setback could prove detrimental for the generic makers and CMOs. The majority of them have been deriving a big chunk of their total export earnings from the world’s largest pharmaceutical marketplace for quite some time.

The tightening of the quality norms along with new requirements in recent years, however, made a compelling reason for the Indian stakeholders to go for an urgent review of established practices so as to cater to the changing needs of regulated markets.

India’s top 20 drug manufacturers are expected to hike their outlays in production facilities by 40% by 2017-18, to over $8.3 billion, forecasts Crisil Ratings, an Indian credit rating agency. A significant portion of the enhanced capital expenditure will go to addressing quality compliance issues by way of improving or upgrading facilities. The agency sees more investments in R&D and capacity expansion by these companies in view of the upcoming generic opportunities, which is estimated around $50 billion in the next two years.

The cost of compliance will be high but bringing in quality systems “would be a very big competitive advantage” and “a huge value differentiator” in the long run, according to companies.

CMOs and other midcap companies often find the gains of compliance can be near-term too. The news of FDA clearance, for instance, of Shasun Pharma and Claris Lifesciences facilities in the recent months drove their stocks up instantly in the bourses.   
On the regulatory side, the government has rolled up its sleeves earmarking huge funds for manufacturing oversight. The idea is to remedy the staff crunch by providing manpower, resources and training in a phased manner and to make sure that the manufacturers go strictly by the rulebook.

The Drugs Controller General of India—the country’s apex regulator—said the government would spend about $511 million to double the number of inspectors. In August, the regulator issued a fresh set of guidelines for inspectors revamping procedures to successfully carry out inspections in drug manufacturing plants. Outlining various steps for preparing and handling such inspections, the new norms mandate that the process should last two to five days “depending on the size and complexity of the manufacturing site”, which is close in line with FDA site inspections that usually last for a week.

While making the inspection process more stringent, the list of procedures calls for immediate action in cases of critical inspection observations, which have direct impact on quality, safety and efficacy of the product. To avoid the usual delays, the inspection team should discuss the findings with manufacturers in the exit meeting and finalize the entire report within a week, according to the guidelines.

The regulator is also organizing joint workshops with FDA in different cities to exchange updates in various aspects of GMPs like process validation, computer system validation etc. The inspectors are also being sent as observers alongside their international regulatory counterparts meant to site inspections, in order to gain hands-on experience on the evolving quality system procedures and facility audits.

The new regulatory guidance is widely seen as an effort to prevent further lapses in implementing GMPs and reassure the quality of medicinal products made in Indian facilities, in light of heightening regulatory challenges and quality concerns.
International regulatory experts have pointed out, though India has a large number of modern facilities, some manufacturers either take cGMP requirements lightly or fail to interpret/understand them properly. It may be because of insufficient internal enforcement and lack of regulatory guidance to government inspectors.

“Quality is one of the major focuses for pharmaceutical exports from India,” stated an official with Department of Commerce, Government of India, recently, indicating that the authorities were pretty serious in straightening out the quality compliance issue.
Apparently, now the spotlight is on prompt regulatory compliance. And the companies that don’t begin to understand any inadequacies in compliance could cost them dearly.