In the past year the US Food and Drug Administration (FDA) has hit West-Ward, Sandoz, Mylan, and other generics manufacturers with warning letters. To avoid becoming the next business in the FDA’s cross-hairs Indian drugmakers are expected to increase investment in manufacturing quality efforts.
“Our discussion with industry indicates that there is likely to be some increase in compliance cost over the near term to meet tightening quality norms in these markets”, ICRA, a credit rating agency, wrote in its analysis of Indian pharmaceutical companies.
Some generics manufacturers have already felt the financial impact of increased regulatory scrutiny. After being sent a FDA warning letter Hospira began “pouring” resources into a North Carolina plant, its CEO Michael Ball said.
Most of the costs are one-offs but ongoing outgoings will stay higher than before the warning letter. Ball said the need for greater investment will raise barriers to entry in the generic injectable sector by, as ICRA predicts, driving an uptick in near-term compliance costs for manufacturers.
Indian generics companies are also investing in manufacturing to overcome inherently higher barriers to entry in certain sectors. This is demonstrated by the diversification of generics filings beyond basic oral solid dosage forms.
“The quality of the filings by top Indian companies has significantly improved over the years with complex molecules [and] non-standard categories, [such as inhalers], forming an increasing share of their pipeline”, ICRA wrote.
Entry into these sectors requires mastery of “complex manufacturing techniques”, ICRA wrote, but having gained these capabilities companies face less competition and improved profitability. In this respect the products have some similarities with biosimilars.
“Given the complexities and high costs involved [with biosimilars], Indian players will need to collaborate with technical partners to aid in the development cycle as well as the marketing stage. Such partnerships are already visible in this segment”, ICRA wrote.