USFDA vigilance on Chinese drug companies may benefit Indian counterparts

HYDERABAD: Indian drug makers see a significant business opportunity in the American regulator’s decision to step up vigilance on Chinese companies that could lead to a dip in China’s exports.
US Food and Drug Administration has decided to increase its inspection staff more than threefold in China to 26 from eight and the number of drug inspectors to 11 from just one at present.

India and the US are the two large importers of Chinese pharmaceutical raw materials, accounting for about $6 billion of purchases every year.

"Stricter USFDA action and rise in foreign inspections during 2008-14 have worsened drug shortages in the US. Based on China’s DMF (drug master file) filings, a tougher FDA could potentially aggravate shortages in antibiotics, chemo and cardiovascular drugs," Anshuman Gupta of Edelweiss Securities said in his latest report. Several Indian drug makers are looking to ramp up their manufacturing facilities to meet the anticipated opportunity, according to a senior executive with a top pharmaceutical company. "Through trade bodies, these companies are urging the government to expedite the proposed bulk drugs policy with large incentives and execute at the earliest the promised manufacturing infrastructure," said the executive, who did not wish to be named.

India produces and exports a large portfolio of bulk drugs to the North American market, covering nearly 80% of product portfolio of China.

"India enjoys several advantages over China. While we have 3,601 DMFs registered in the US market, China has only a third of it at 1,216 DMFs," said PV Appaji, director general of Pharmaceuticals Export Promotion Council (Pharmexcil), adding that India depends on China for a few intermediates and bulk drugs that require fermentation technologies.

Lupin’s spokesperson Shamsher Gorawara said the company sees a major opportunity for Indian manufacturers of bulk drugs and intermediates in case China suffers from increased inspections.

Atop Aurobindo Pharma executive, who did not want to be named, said, "Most Indian companies including Aurobindo that have large bulk drugs manufacturing capabilities are set to benefit from any adverse impact that China may suffer. The Indian firms have the capabilities to fill the vacuum created by the Chinese firms in the US market swiftly but the US consumers may need to cough up more to buy Indian products given their superior quality." Indian drug makers could suffer a setback too since many of them are heavily dependent on Chinese raw materials.

"China may restrict Indian medicine makers from using its key raw materials intermediates to make bulk drugs for the US market in a bid fill the gap created by it," said Pharmexcil’s Appaji. In such a scenario, a large number of Indian drug makers heavily dependent on Chinese raw materials could suffer badly till India achieves self sufficiency in manufacturing bulk drugs and intermediates," said a senior executive of the Bulk Drugs Manufacturers’ Association, requesting anonymity.

The large importers of bulk drugs and intermediates from China including Ranbaxy, Sun Pharma, Cipla and Torrent did not respond to ET’s emails seeking to know the likely adverse impacts.

China exports drugs, predominantly bulk drugs, worth $4 billion to the US market ever year while India exports close to $5 billion drugs to the North American market with formulations dominating the exports. Of the total $15 billion (about Rs 90,000 crore) exports of pharmaceutical products, the US accounts for nearly a third of it. India and China have about 600 each USFDA approved facilities, though Indian facilities have been subjected to increased inspections of late. Edelweiss analyst Gupta said increased inspections on Indian pharma facilities led to an increase in the number of import alerts last year. India saw 600 inspections in 2013 compared to 350 in China.

The number of inspections shot up to 650 in India this year while China witnessed 480 inspections.