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Tighter GMPs a significant risk for Indian drugmakers; CARE

By Nick Taylor , 25-Jun-2012

The manufacturing quality clampdown by regulators is a “significant risk” for Indian drugmakers, a credit rating agency said.

Regulatory actions have stunted growth at some Indian pharmaceutical companies, such as Ranbaxy and Aurobindo, while alerting others to the threat posed by non-compliance with quality standards.

Actions taken by drug regulators and other regulatory agencies resulting in closure of manufacturing units, de-listing of products from the approved list and lower sales to certain geographies, affected the financial performance of some companies,” CARE Research wrote in a note on the Indian market.

The consequences of non-compliance are particularly acute for companies with sales concentrated in a certain product segment or geography. Avoiding problems before they arise is now high on the list of priorities for Indian drugmakers.

In March a fellow Indian credit rating agency, ICRA, reported that more stringent oversight by the US Food and Drug Administration (FDA) is driving Indian pharmaceutical companies to invest in quality. This spending will increase near-term costs but should help safeguard firms against regulatory hits.

Manufacturers in established markets are also feeling the pressure. Pharmaceutical firms, generics companies, and contract manufacturing organisations (CMO) have all faced sanctions from the FDA and the fallout is reshaping the industry.

We’ve seen attrition in the US CMO market because of pressures from the FDA,” Glenn Alto, CEO of Pharmalucence, said at Interphex last month. Ben Venue Laboratories has said it is pulling out of the CMO sector and the higher barrier to entry, particularly in parenterals, could cause further exits.

For those that stay in the market the disruption presents an opportunity. Last week James Mullen, CEO of Patheon, said it is winning business on the back of regulatory actions against its competitors and major biopharma companies.

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