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Insight & Intelligence : Feb 21, 2014
Rougher Passage to India’s Drug Market
FDA raises quality concerns, Indian officials favor domestic makers, pharma giants balk.!--h2>
FDA Commissioner Margaret A. Hamburg, M.D., contrasted the craftsmanship and beauty of India’s Taj Mahal with recent lapses in quality by “a handful” of the country’s drug manufacturers during a recent visit there. If the comparison was meant to flatter the domestic pharma executives and regulators with whom she met, they didn’t appear to think so.
Dr. Hamburg and officials from India’s Ministry of Health and Family Welfare pledged cooperation in data sharing and even “medical and cosmetic product and inspections conducted by the other Participant.” That’s no small promise since India is the world’s second largest exporter of prescription and over-the-counter drugs. Yet their formal Statement of Intent conditioned such cooperation “as time and resources allow” and didn’t set specific terms.
In a conference call with reporters today, Dr. Hamburg said implementing the statement was a five-year commitment “already under way” as both countries “have already embarked upon some cross-training activities and started to identify some critical areas for future activities together, so I think progress will be made.”
India’s ultimate cooperation with FDA is hard to predict given public uneasiness by Indian officials and drug companies about agency scrutiny. Days before Hamburg’s visit, India’s chief pharma industry regulator, Drug Controller General G. N. Singh, Ph.D., told India’s Business Standard: “If I have to follow U.S. standards in inspecting facilities supplying to the Indian market, we will have to shut almost all of those.”
Asked by GEN today how she could be confident of Indian cooperation based on the statement, Dr. Hamburg said Dr. Singh “discussed with me his eagerness to work closely with us and interest, in fact, in getting technical assistance and training opportunities” for his regulators to observe FDA’s Indian inspections. FDA stations 12 staffers in India—a number she said is expected to rise to 19.
“I think he also understands that every regulatory authority must work within their own national laws and regulatory framework,” Dr. Hamburg added. “When products are sold in the United States for use by American citizens, then those products do have to meet our standards.”
Indian drugmaker Ranbaxy has come under repeated FDA scrutiny. It agreed last year to pay a $500 million fine for safety and record-keeping violations. More recently, it urged Dr. Hamburg to lift the FDA’s consent decree. Extended as of January, this decree effectively bans four of Ranbaxy’s Indian plants from exporting active pharmaceutical ingredients to the United States. Although Ranbaxy contended that it needed the export activity to fund FDA-sought quality improvements, Dr. Hamburg declined the company’s request.
Dr. Hamburg’s visit highlighted the challenges Washington perceives from India’s growing domestic biopharma industry, which exports some $15 billion in drugs each year. As far as the FDA is concerned, these challenges pertain to product quality. But there are other challenges that lie beyond the FDA’s purview, as global pharma giants have found in their pursuit of business opportunities in India.
According to the All India Chemists and Druggists Association data reported by Indian newspaper The Economic Times, Mumbai-based Glenmark Pharmaceuticals impacted the Rs 3,000 crore ($483.7 million) Indian diabetes drug market long dominated by multinationals last year. Glenmark racked up Rs 16 crore ($2.58 million) in eight months for its Zitamed and Zita generic versions of sitagliptin
These generics sold 30% cheaper than the Januvia and Janumet branded drugs of market leader Merck & Co., which generated more than $5.8 billion in combined global 2013 sales for Merck and are the subject of a patent dispute between the companies.
Through court decisions and regulatory actions, Indian officials have pressed foreign-based multinationals for lower-cost drugs. These multinationals, however, have argued that Indian actions hinder their ability to do business selling innovative if costlier drugs.
“The upper socioeconomic segments can afford western products at western prices, but the middle class can benefit from innovative products tailored to their specific needs and pocketbooks,” Gunjan Bagla, managing director of Amritt, a Cerritos, CA, management advisory service that assists U.S. companies expanding into India, told GEN. “Some western companies are capable of and interested in addressing this segment while others are not.”
India’s Patent Office sent shivers through the biopharma industry in 2012 when it revoked the exclusive patent rights held by Bayer for cancer drug Nexavar, and awarded the nation’s first-ever compulsory license to a domestic maker of a much cheaper generic. Industry cringed again last year when India’s Supreme Court rejected patent protection for Novartis’ blockbuster cancer drug Glivec, as the drug faces a 2015 expiration of its first U.S. patent.
The patent decisions, Bagla explained, reflect Indian compliance with the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) of the World Trade Organization, of which India is a founding member.
“Western companies need to factor this situation among the risks of doing business in India,” Bagla emphasized. “Some of our clients are limiting their involvement in India due to this. Others are a taking a measured approach to what products and technologies they bring. Very few are walking away from India completely.”
The reason: India has numerous advantages for globally focused biopharma companies that include growing local demand for drugs, a large technical talent pool, a large-enough pool of executive talent to build and run drug manufacturing plants, and a location suitable for manufacturing products for the Middle East, Southeast Asia, and Africa.
Concerns over patent protection, however, have pushed investment in India behind the other three emerging BRIC nations (Brazil-Russia-India-China), Marcus Ehrhardt, Ph.D., a partner in the New York office of Booz & Co., told GEN.
Citing Nexavar, he said: “You have strong patent protection in every part of the world, and you invested a lot of money to develop this drug. And suddenly the Indian government allowed a local generics company to copy the product, and then they sold this cancer drug at one-thirtieth of the price. That basically kills your whole business case, and that’s why India, so to speak, is less high on the radar to pharma companies.”
“The present concern in India pushes more toward investments from a generics point of view than from your best innovations,” Dr. Ehrhardt added.
Legal and Regulatory Moves
Last year, the Indian Supreme Court ordered a nationwide halt to clinical trials for 157 new chemical entities, citing the need for stricter ethical standards after seven girls died in a Phase IV trial of an HPV vaccine carried out on children unaware they were under study. The court also shifted responsibility for trials from the Central Drugs Standard Control Organization headed by Dr. Singh, ordering India’s Health Secretary personally responsible for new-drug clinical trials.
Late in 2013, India enacted the Drug Price Control Order, reducing the price wholesalers can charge retailers for some 350 medicines accounting for about 60% of the domestic drug market, squeezing profits from retailers. In retaliation against pharmas that complied with the law, retailers stopped selling drugs by those companies.
“In the major pockets of the country, our products are not being purchased by the trade from September 15, 2013,” GSK’s Indian prescription-drug subsidiary GlaxoSmithKline Pharmaceuticals told the Bombay Stock Exchange on October 7, explaining a 7% third-quarter dip in Indian sales.
Expansions, Closings, Partnerships
GSK is now seeking majority stakes in GSK Pharmaceuticals and a second publicly traded Indian subsidiary focused on consumer health products. The company is also building a Rs 864 crore (about $139 million) medicines manufacturing plant in India that will produce gastroenterology and anti-inflammatory medicines, as well as vitamins.
GSK said the plant will employ 250 people and produce 8 billion tablets and 1 billion capsules annually after it opens in 2017. Still unknown is where the plant will rise. A GSK spokesman, Kalpesh X. Joshi, told GEN last week the company had not decided definitively on a location, “but the lead site is in Bangalore.”
“The investment is being made to increase the capacity of our manufacturing base and enable us to bring more medicines to the people of India,” Joshi said. “India is our biggest volume business, and we need to be able to keep up with demand.”
GSK is better able to adapt than most other pharmas given its long history in India, thanks to long-popular products such as health-food drink Horlicks. During that time, GSK has faced and surmounted past pricing reform efforts, with CEO Sir Andrew Witty urging more cooperation between Indian regulators and industry. “GSK takes a long-term view on the Indian market. We have been here for nearly 100 years and remain committed for the long-term,” Joshi added.
AstraZeneca (AZ), on the other hand, is closing the Avishkar R&D site in Bangalore it has operated since 1984. A total 168 employees are based there, down from 180 a decade ago. AZ has blamed its ongoing companywide restructuring. It has narrowed its core therapeutic areas and will no longer carry out R&D on Avishkar’s specialty of neglected tropical diseases.
With India’s business climate getting chillier, big pharma will have to focus short-term on generics through partnerships offering Indian drug companies access to the United States and Europe. On February 13, Merck’s joint-venture partner in India, Sun Pharma, won FDA approval for a generic Temozolomide, which generated about $400 million last year for Merck as Temodar®—down from $917 million in 2012 after losing patent protection in August.
Long-term, the partnerships hold hope of building support for new branded drugs within India by showing a benefit to Indian companies. Building such support will take longer than an FDA visit or a couple of quarters.
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