Indian Pharma: Regaining Our Brand Equity

Image adapted from: http://bit.ly/1epQQSm

Global Impact of India’s Pharma Industry

Imagine a scenario where a life-saving medicine for HIV/AIDS costs $12,000 a year, pushing it out of reach for most patients who need it. Or a world where a rotavirus vaccine costs $9 per dose, making it too expensive for most children across the globe.

Now, consider a reality where we radically bring down the cost of these essential therapeutics.  This has actually happened – in 2001 HIV treatment was revolutionized by an Indian company CIPLA where a three-in-one HIV/AIDS treatment was made available for a dollar a day.  In 2013, Bharat Biotech, an Indian manufacturer of a new rotavirus vaccine has pledged to sell it for $1 a dose, even below the $2.50 per dose negotiated by the GAVI alliance.

India’s pharma industry has been at the core of this public health revolution. By delivering high-quality generics at the lowest cost, India has become irreplaceable in delivering affordable access to healthcare – to the world and to the US, which is the largest market for generic medicines.

Drug manufacturers in India have brought down the prices of a range of therapeutics — from vaccines for Hepatitis B, diphtheria, polio and tetanus, to drugs for HIV, tuberculosis, diabetes and cancer — and saved millions of lives in the process.

Indian generics account for a 30% share of the US market and are critical to President Obama’s affordable healthcare programme. Data from the 2013 Generic Drug Savings in the US report shows that generic pharmaceuticals saved the US health system and patients $217 billion in 2012 and a staggering $1.3 trillion dollars in the most recent decade.

The Indian pharma industry’s impact can be gauged from the following:

•  It accounts for 6% of the world's pharma industry in value and constitutes a significant 25% in terms of volume
• With over 60,000 generic brands across 60 therapeutic categories, India manufactures more than 400 different active pharmaceutical ingredients
• India is the largest global exporter of generic medicines (in volume)
•  It exports vaccines to 150 countries and caters to 70% of the World Health Organization’s demand for DPT and BCG and 90% of measles vaccines
•  One in three of the world’s children receive vaccines made in India

Bad Medicine Or Bad Press?

Recently, the reputation of “The Pharmacy to the World”, as the country’s drug industry is called, has been sullied. Ranbaxy, Wockhardt, Sun Pharma and other manufacturers have been put on notice by the USFDA. Some of their products were banned or recalled and some of their processes red-flagged for non-compliance with current good manufacturing practices (cGMPs).

These quality control issues – a few major and mostly minor – have given rise to a lot of bad press which is damaging India’s reputation. While some of this taint can be justified due to irresponsible actions of a few drug makers, it is evident that vested interests among global pharma stakeholders are engaging in propaganda and alarmist reporting, projecting the whole of India’s pharma industry as having poor regulatory standards.

Even Margaret Hamburg, the commissioner of the United States Food and Drug Administration, commented “recent lapses in quality at a handful of pharmaceutical firms” overshadowing the good manufacturing and quality process of many Indian companies.

If there are a few errant manufacturers in any country, would the entire industry of a country be suspect? This would never be the case, but this is what is happening to India’s pharma industry.

The world – and the US – needs to understand that we are an integral partner in their affordable healthcare system. While the US and Europe may be among the largest producers of generics in terms of value, their products lack the cost-efficiency that India offers.

Let us understand what India can do to blow away this black cloud of “bad quality” which hangs above our pharma industry.

Our Quality Image – Myths and Reality

The Indian pharma industry has built a formidable position in the global market by leveraging its strengths. The quality standards at India’s pharma companies are already quite high, thanks in part to the industry’s export thrust. According to Pharmexcil, over 55% of the country’s exports are to highly regulated markets.

So what has happened to change this situation in the recent past? Has our normally robust quality control system become weak? Or are vested interests seeking to counter India’s capabilities and market share — trying to block our industry through lobbying and loaded claims?

1.    Greater The Share, More The Scrutiny

As the India’s market share in the US, grows, it is only understandable that our exposure to US FDA scrutiny rises. Add to that US FDA’s stricter compliance rules and procedures, and we can see why there has been a sudden rise in alerts and notices.

India has 119 manufacturing sites approved by the US FDA, the highest in any country outside of the US. According to US FDA data, inspections of drug facilities in India rose to 195 in 2012 from 11 in 2002.

Domestic manufacturing facilities received merely two import alerts in 2012. However, in 2013, 19 drug manufacturing factories across India were barred from supplying medicines to the US. In the same period, Chinese drug manufacturing facilities faced seven FDA import alerts; Australian, Canadian and Japanese companies two each; and South African and German units one each.  However, when viewed as a percentage, the optics would favour India.

2.    We Are Not The Only Ones Picked, But We’re Paying The Greatest Price

Pharma companies from other countries have also been pulled up for non-compliance with quality control norms and procedures. This is true not merely of companies outside the US, but also of companies within the US.

From 2010 to June 2013, the US FDA has issued warning letters to 66 companies. 12% of these companies were Indian. But major global names – both generic manufacturers as well as innovators — figure in that list of 66. These include Boehringer Ingelheim, Hospira, Merck, Novartis, Genzyme, Sanofi Aventis, SmithKline Beecham, and Teva.

And the number of warning letters issued has been growing each year: from 14 in 2010 to 19 in 2011 and 21 in 2012. Till June, 2013 there were 13 warning letters issued.

But nowhere except in India is the entire industry being unfairly victimized for the actions of a few.  Unfortunately the global media attention that focuses on alerts or warning letters issued to Indian pharma companies fails to reflect the reality that we are not the only country facing US FDA action.

3.    Minor Deviations In A Maze Of Regulations

Understanding and navigating the ever-changing and increasingly unforgiving regulatory scenario of Good Manufacturing Practices (GMP), Good Clinical Practices (GCP) and Good Laboratory Practices (GLP) in the pharma industry is extremely crucial. Even as these regulations set a legal benchmark for high quality products, they set a standard for exports that companies must meet if they seek to penetrate markets abroad.

However, India does not export to the US alone. For example, the EU has endorsed 350 Indian manufacturing sites till April 2013. Moreover, India exports to countries across the world. The stakes are huge. India’s pharmaceutical exports are poised to rise to about $20 billion by 2020.

There is no globally harmonized standard of drug safety, efficacy and quality. Pharma companies face increasing pressure to comply with a plethora of global regulatory standards across diverse geographies. These standards keep changing as regulatory bodies make requirements more stringent.

In such a situation, Indian pharma companies, even when they try to adhere to all these varying standards, may fall short of regulatory expectations in some cases.

The only incident of serious regulatory non-compliance pertains to one company, Ranbaxy, and most regulatory infractions pointed out by the regulators, fall within the realm of deviations that reflect oversight or negligence.

With adequate attention and corrective action, all errant Indian companies can quickly satisfy regulatory requirements. India already has high benchmarks in quality and this must be recognized.

Debunking the ‘Bad Quality’ Myth

Our current troubles are a wake-up call for the entire Indian pharma industry for collectively working to protect our reputation and build our quality image through an action plan.

Exports have played a crucial role in the growth story of the Indian pharma industry, and the US is one of the biggest export markets for Indian generic drug makers. It is, therefore, imperative to ensure that we set standards of quality and compliance for both products and services that are on a par with the best in the world. In most cases, these are already in place.

While one aspect of our action plan needs to ensure compliance with regulations, the other prong of our attack must effectively battle the unfair propaganda that the industry is facing. A crucial component here is demonstrating — in the market and in media — that our pharma industry is the keystone for delivering high quality, affordable medicines to the world.

If Indian generics account for a 30% share of the US market by volume, this should translate into value as well. Given India’s low-cost differentiator, this may not translate into value as in realization of profits proportional to our share by volume. But this value certainly needs to be rendered into a respect and recognition of India’s indispensability in driving affordability across the global healthcare system.

An abridged version of this article appeared in The Economic Times on Tuesday, April 8th, 2014.