Regulatory compliance issues, mostly involved with the US FDA, have been one of the key concerns for India’s drug industry
Severe shortage of trained professionals for managing regulatory compliance is the biggest reason for increased instances of actions like sales ban, import alerts by foreign regulators in the Indian drug industry, says a recent survey conducted by consultancy and audit firm Deloitte Touche Tohmatsu India. Regulatory compliance issues, mostly involved with the US Food and Drug Administration (US FDA), have been one of the key concerns for India’s drug industry, which exports more than half of its production to various international markets including the US and Europe, in the last several years and it is estimated that the economic impact these issues in the Rs 1,50,000 crore industry has been in the range of at least 7 to 8 per cent annually.

According to Deloitte India’s latest survey report titled ‘Managing Growth Through Better Compliance Management’, the report, the rise in regulatory non-compliance in the sector may be attributed to the evolving changes in regulatory standards, which have resulted in limited availability of compliance management professionals equipped to manage these requirements. About 55 percent of survey respondents have indicated that their compliance teams were not adequately trained to address regulatory requirements, the report said .

Besides talent shortage, lack of an efficient internal control or compliance system (61 per cent of survey respondents), inadequate utilization of technology to identify red flags (45 per cent), and lack of a zero tolerance approach towards noncompliance and malpractice (45 per cent) were indicated as key contributors to noncompliance and malpractice in the sector.

Worst among the recent regulatory compliance issues in the Indian drug industry includes the import bans imposed by the US FDA on four large manufacturing facilities of Ranbaxy Laboratories (currently merged with Sun Pharmaceuticals Industries), two Aurangabad units of Mumbai-based Wockhardt and an active pharma ingredients and formulation plant of Sun Pharma in Gujarat. While the import alerts at these units are still unresolved, several other leading drug companies in the country including Lupin, Cadila Healthcare, Strides Arcolab had also faced manufacturing compliance issues from foreign drug regulators in the past.

The Deloitte India survey, which was started in August 2014, also pointed out that 30 per cent of survey respondents said they had experienced noncompliance with good manufacturing practice guidelines in the last two years. However, 45 per cent said they had not experienced any type of noncompliance.

Around 48 per cent of survey respondents confirmed that compliance strategy was not a key area earmarked for investment in their organizations, indicating that perhaps senior management did not consider this area as a high risk with serious consequences in the event of non-compliance.

India has about 546 drug manufacturing plants approved by the US FDA, 857 manufacturing units approved by the UK drug regulator Medicines and Healthcare Products Regulatory Authority and about 1295 units with World Health Organisation’s good manufacturing practices certification.

“The majority of our survey respondents have identified compliance challenges and shortage of skilled resurces as hampering their company’s growth,” said Nitin Bidikar, head- pharma practices and director, Deloitte India.

“These concerns have existed for sometime within the industry, but recent string enforcement action by regulatory bodies has brought these issues to the forefront now,: he added.

Out of the 33 leading pharma and life sciences organisations responded to Deloitte survey, 76 per cent of corporate respondents in the Deloitte’s survey, responded to the question how they detected fraud, non-compliance and malpractices, as they relied on whistleblowers. Upon detection of fraud, 85 per cent of respondents said they launched an internal investigation by a specially appointed committee, while 82 per cent confirmed that some form of disciplinary action was initiated as per existing policies and fraud and compliance risk management frameworks. The survey report also discussed the key types of noncompliance observed in the sector along with providing a roadmap for organizations to build an effective compliance management system.

“Lack of strong enforcement of quality norms by the local authorities and the industry mindset that hasn’t yet identified quality compliance as a priority area have been the contributors to increased regulatory woes in the domestic industry. But, heavy revenue impacts due to these issues have now forced the industry to realize the due importance of regulatory compliance,” said Amit Bansal Senior director, Deloitte India.

The respondents to the survey included foreign multinationals with operations in India, Indian organisations with operations overseas and in India, Indian organisations with domestic operations and global life sciences organisations producing products for the parent organisation. Sub-sectors such as pharmaceuticals, medical devices, contract research, biotechnology and clinical labs had also responded to the survey queries.

Source : C.H. Unnikrishnan