The Hindu Business Line : Generic drug makers’ concern over Ranbaxy-USFDA stand-off

Ranbaxy had been put under the scanner, for what the US Department of Justice describes as “systemic fraudulent conduct” including submissions made by the company to the FDA on stability and bioequivalence, failure to timely report the distribution of drugs that were out-of-specification.

P.T. Jyothi Datta

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Mumbai, July 17

There is more to it than meets the eye, is the refrain from domestic drug industry officials, watching with concern the constantly changing developments on Ranbaxy’s tryst with the United States regulatory authorities.

Even as questions are being raised on the documentation and quality of drugs that Ranbaxy sold in the US, latest media reports from the US say that the US Congress too is now examining the role of the regulatory US Food and Drug Administration (FDA), since the Ranbaxy issue has been on for the last three years.

(In a communication to the stock exchanges, Ranbaxy today said: “We are not aware of any Congressional committee inquiry and have not received any communication in this regard.” Its shares were down nearly 4 per cent on the NSE today at Rs 452.50.)

But for the Indian generic drugs industry, that has constantly had to ward off doubts cast on its quality and efficacy, the Ranbaxy stand-off in the US is disconcerting. The fear being that the generic industry will now more so be viewed with suspicion, never mind how Ranbaxy’s case pans out.

Allegations

Ranbaxy had been put under the scanner, for what the US Department of Justice (DoJ) describes as “systemic fraudulent conduct” including submissions made by the company to the FDA on stability and bioequivalence, failure to timely report the distribution of drugs that were out-of-specification and attempts to conceal violations of the FDA’s Good Manufacturing Practices.

Ranbaxy had further been questioned over the use of pharma ingredients from unapproved sources, mixing of approved ingredients with unapproved ones and having reduced quantity of the pharmaceutical ingredient in a drug approved by the FDA.

Such actions could lead to the medicine being “sub-potent, super-potent or adulterated,” the DoJ said.

At the heart of this controversy was Ranbaxy’s plant at Paonta Sahib, Himachal Pradesh, that was inspected by the FDA in 2006. Ranbaxy on its part maintains that all information required by the US authorities will be submitted.

But is it only about documentation and “semantics”, questions another Mumbai-based industry expert. The FDA definition of an adulterated drug varies from the local understanding, where adulterated means not containing the ingredient it claims to contain, i.e. a crocin containing chalk powder and no pharmaceutical ingredient, he explains.

But why would documentation related issues take three years to resolve, he questions, pointing out that something was amiss. Ranbaxy should have given all required documents when it was first asked for and not allowed matters to come to such a pass, he adds.

There are several interested quarters gunning for the generics industry, as the latter provide medicines that are chemically similar to innovative medicines, and at a much lower cost, explains a seasoned industry official.

The US accounts for over half of the $680-billion-plus global pharmaceutical market. And of this, the global generic drugs market is about $60 billion and the US accounts for over half of this market as well.

About 45 per cent of Dr Reddy’s Laboratories’ generic revenue comes from North America; Wockhardt sells 58 products in the US; Glenmark’s generic sales in the US grew last year by 155 per cent and Sun Pharma’s US sales grew 167 per cent last year – to name just a handful of Indian companies that sell in the US.

There are a host of smaller and mid-sized companies as well that sell to larger companies in the US.

And that explains why more than just Ranbaxy’s management are closely watching developments in the US.