Rough weather is a constant companion of Indian generic drug-makers in the overseas markets. They have been seized in Europe for alleged patent infringement, warned by the US Food and Drug Administration, and disparaged by innovators as “copy-cat” or “me-too” drugs. Sitting in a quiet corner of a South Mumbai landmark hotel on a regular monsoony day, D.G. Shah, Secretary-General of the Indian Pharmaceutical Alliance (IPA), answers some blunt questions about the mistakes, lessons and way ahead for Indian drug-makers.

Shah has been with the IPA since it was founded in 1999-2000 by industry stalwarts – the late Parvinder Singh, Ranbaxy’s erstwhile promoter, the late Anji Reddy, founder of Dr Reddy’s Laboratories, and Cipla doyen Y.K. Hamied – as the voice of large Indian drug-makers .

Excerpts from the interview:

Ranbaxy’s settlement, on criminal and fraud charges against it – will it affect other Indian generic drug-makers?

It is an unfortunate episode. It shouldn’t have happened. But now that it has happened, the learning is that any form of non-compliance is far more costly than compliance. To elaborate, Ranbaxy’s $500 million penalty is small compared to the business it lost in the last few years. So the lesson is loud and clear.

Also, we have the largest number of US FDA approved plants outside the US. So more import alerts are proportionate to the number of facilities here.

Published statistics on import alerts say Canada has had 63, UK 42, Japan 40, Germany 35, and India about 46. Where there is a zero tolerance policy, some human error, some equipment error may still occur. The important thing for industry is to be proactive, work with the USFDA, and own up its errors.

When the biggest in the industry admits to wrong-doing, isn’t it worrisome that others could be cutting corners too, to stay competitive?

This is driven by ambition to grow faster, which is a form of competition. Not just pharma, but across the board, industry needs a culture change. You cannot have one segment of the organisation having a culture that fits in with the USFDA, while the rest do not follow. The entire culture has to change, and companies should value this as a long-term growth strategy.

Doesn’t that imply that local standards may not be up to the mark and local consumers are exposed to sub-standard products?

This question has been raised repeatedly. If you look at large, older companies exporting to regulated markets, they don’t make products of two qualities because it is difficult to have two sets of cultures in an organisation.

You cannot tell a worker this is for the domestic market and you follow these norms, and this is for export, so do it differently. It has been seen that companies first upgrade to meet US and EU standards. New plants and teams with the upgraded standards supply export and local markets with the same quality products.

But the onus of upgrading companies focused on domestic markets lies squarely with the Government. It happened with textiles, where money was set aside for upgradation. A similar scheme, but in a larger way, is needed here, to support units that are serious players and need fiscal support to modernise and upgrade their plants to ensure Indian consumers get quality goods. Those who do not want to migrate to this area can be allowed to close down.

But the Government does have Schedule M, ensuring good manufacturing practices?

Schedule M was brought without enough fiscal support. What came was inadequate.

India has received much global attention over implementation of the amended Patents Act (2005). A recent testimony by a Pfizer executive to a US sub-trade committee said the implementation was “ineffective” and the reigme “protectionist”. IPA countered these observations. What is your concern?

By Pfizer’s admission, India is being seen as a leader and other countries are following India’s example and amending their IP (intellectual property) laws. The concern, though, is the changing stance of Pfizer and developed countries’ governments. First they asked for a regime that protects product patents and when that happened, they said India does not conform to global free-trade agreements. View this change with other developments.

The US foreign manufacturers’ liability bill is for all foreign manufacturers. But it could bestow onerous liabilities on food and drugs exported from India, creating a non-tariff barrier. So an offensive on India’s IP regime, coupled with a defensive measure in the name of protecting the US consumer, but creating a barrier.

There is also a campaign to get the US government to use all policy measures to get India to agree on other contentious IP-related issues. All this is a concern for domestic industry.

Lastly, the Ranbaxy episode is being extensively used by the branded industry to malign the entire generic industry. So these are all challenges that Indian pharma faces.

But is India coming out of this looking like it is anti-innovation?

Examine dispassionately what has happened. Since we spoke of Pfizer, I take their example. Pfizer got 165 product patents (2005 to 2012), one product patent was revoked. Subsequently, in record time, three judicial powers – IPAB (Intellectual Property Apellate Board), Delhi High Court and Supreme Court – stayed the revocation and also granted an injunction against the generic maker.

By any standard in the world, the speed with which this case moved shows we are moving in the right direction. We want patent protection. The Government, Parliament and Indian industry supported the balance between the best of innovation and the consumer. And this is what the Indian law reflects. Barring a dozen instances, there are several occasions where Western industry has got IP protection here.

Again, there has been just one compulsory license (CL) granted (2005-2012), and that too on a kidney cancer drug. (A CL allows a company to make its version of an innovative drug, on payment of royalty.) Compare this to Italy granting a CL on a hair-growth product.

How do you view the earlier seizure of generic drugs abroad, the tie-up between Interpol and 29 drug majors to tackle counterfeits, and the thin line between defining generics and counterfeits?

That is again a major source of concern, because Interpol, Customs, the universal postal union and so on are various agencies being roped in by the US and EU.

It would impact export shipment of generics from India to other countries because these agreements provide powers to Customs to seize any consignment they suspect. Often officials do not know the fundamental difference between patents and copyright. And you give rights to agencies who cannot interpret whether a product is coming into your market or transiting through to another country.

India will have to eventually look for other routes – and this is the best way to deal with this. We will not send goods to Latin America through Europe. Let European airlines suffer. Go for a South-South cooperation – India-Jo’berg and Rio. We develop different trade routes and this is the only language they understand.

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