Earlier this month, the US Food and Drugs Administration (FDA) issued a form 483 to Bengaluru-based Biocon with eight observations. Last month, pharmaceutical major Lupin's facility in Goa and more recently in Aurangabad was issued a similar form 483 by the US drug regulator, observing violation of good manufacturing practices. Just a few days earlier, Aurobindo Pharma said it had received a form 483 with six observations from the US FDA for one of its units in Hyderabad.
Even bigger drug makers like Sun Pharmaceutical Industries and Dr. Reddy's Laboratories haven't been spared by the US FDA.
The recent inspections show that the US drug regulator has increased its vigil on Indian pharmaceutical companies and is keeping a close watch on the numerous pharma manufacturing plants spread across the country.
As per US FDA data, it conducted nearly 290 inspections in India in 2015, up from about 260 in 2014 and 160 in 2013.
What is form 483?
It is typically issued to a company after the regulator has concluded an inspection of the facility and observed any conditions that in their judgement may constitute violations of the Food Drug and Cosmetic (FD&C) Act and related acts.
Such observations are made when the inspectors judge that a particular drug or a device has been adulterated or is being prepared, packed or held under conditions that may lead to adulteration or it may become injurious to health.
Indian pharma companies are also being pulled up for things like records maintained of any modification of established testing method not including reasons for the modification, not adequately validating equipment cleaning procedures etc.
Once a form 483 issued to a company, it is presented to and discussed with the management of the company. The companies need to respond to the observations made in the form 483 in writing in a specific time frame with a corrective action plan and then implement that action plan efficiently.
Why the increased scrutiny on Indian firms?
India is the second largest supplier of pharmaceuticals and seventh largest supplier of food in the United States.
In an official blog in March, Mary Lou Valdez, the FDA's associate commissioner for International Programmes, noted the strong growth in India's pharma market, but also raised quality issues.
“Quality issues are an ongoing challenge for the Indian pharmaceutical industry,” Valdez said.
If India was to fully realise the potential as an important player in the global pharmaceutical industry, the country's regulatory infrastructure must keep pace to ensure that global quality and safety demands are met, Valdez added.
FDA inspections of pharma manufacturing facilities in India particularly picked up from 2012 when the US implemented the Generic Drug User Fee Act, which aimed at fast tracking product approval process, while also subjecting drug manufacturers in foreign countries to the same level of scrutiny applied to US manufacturers.
A report by broking firm Edelweiss noted that since the act was implemented India and China now account for about 20 per cent of the total FDA inspections, versus 11 per cent earlier.
Earlier, Indian plants used to be inspected once in two years, now plants where issues had been raised previously are being visited more often, since the Act was passed.
While the FDA continues to raise observations on Indian plants, there has been only one import alert issued on an Indian facility in the past almost 18 months, a sign that companies are looking to address issues, said Amey Chalke, research analyst at HDFC Securities.
In December 2015, three companies had received warning letters. However, since then, only one has received an import alert post that, in the past one and a half year. Most Indian facilities have been inspected at least once now and companies will be more prepared for inspections. Gradually, the companies will spend much more on their facilities than they did earlier,” he said.
Warning letters are usually issued when there are significant violations by companies in manufacturing practices.
Companies like Lupin, which have been recently issued such observations, say they will respond and address the issues raised, without giving specifics.
“We wish to state that the company has multiple facilities, which cater to the US and other advanced markets and undergo periodic routine inspections by the US FDA or other regulators from different countries, in the normal course of business,” Lupin said.
Biocon said “observations on form 483 is a standard outcome of any audit” and it has responded to US FDA on all observations of the recent audit within stipulated timelines. It further added that it has “good track record” of inspections.
Pharma stocks have been under pressure amid the regulatory hurdles. In the last one year, the BSE Healthcare has declined close to 4 per cent, even as the wider Sensex has jumped near 20 per cent.