U.S. Drug Regulator’s Inspections In India Spike

The U.S. drug regulator's inspections of Indian facilities spiked last year even as it conducted fewer checks in the rest of the world, underscoring the risk domestic companies face in one of their largest markets.

Inspections by the U.S. Food and Drug Administration in India jumped 24 percent over a year earlier, according to a report by Bank of America Merrill Lynch. By comparison, the number of global inspections by the regulator fell 18 percent.

India accounted for 14 percent of the total drug quality inspections in 2018 compared with 9 percent in 2017, the note by Girish Bakhru, a pharma analyst at BofAML, said. The nation contributed about 6 percent of the total such checks till mid-February this year. The brokerage attributed the increase partly to recall of hypertension drug with contaminated pharma ingredient valsartan.

That points to the increased scrutiny Indian drugmakers' manufacturing practices face for their exports to the American market, the biggest contributor to the sales of some of them. Already, local pharmaceutical companies have been facing intense competition, forcing them to cut prices and settle for lower margins.

Lupin Ltd., Aurobindo Pharma Ltd., Dr. Reddy's Laboratories Ltd., Jubilant Lifesciences Ltd. and Alkem Laboratories Ltd. are among the Indian drugmakers that have seen fresh inspections.

Despite more inspections, the silver lining is that most of the U.S. FDA checks last year didn't lead to any regulatory cation, according to Bakhru. Only nine inspections resulted in official action indicated status compared with 22 in 2017.

Param Desai, a pharma analyst at Elara Capital, said the overall negative news flow from the regulator has slowed over the past few years as most plants are now getting compliant with good manufacturing standards. Receiving a Form 483—a list of observations at the end of an inspection—is normal process, according to Desai, and the trouble begins only if it gets escalated.

The number of inspections in any given country reflects the agency's risk-based prioritisation of the inspections and improvements in targeting, according to a U.S. FDA spokesperson.

“The FDA's policy for prioritising and scheduling drug manufacturing inspections at higher risk facilities for quality-related surveillance is based on a facility's compliance history, recall trends, time since last inspection, inherent risk of the drug being manufactured, processing complexity, and other factors, which are all carefully weighed and considered. While we cannot discuss future compliance or enforcement related matters, the FDA is maintaining global vigilance by concentrating inspections on higher risk facilities,” the spokesperson said in a reply to an email query. 

Here's a list of Indian drugmakers whose facilities were inspected in recent months

Alkem Labs

• The American drug regulator inspected the company's facility in St. Louis, Missouri, U.S. during a pre-approval check for a certain product, according to its exchange filing. The FDA handed out eight observations and the regulator withheld the product till the completion of final evaluation, the company said without disclosing the details of the drug.

Jubilant Lifesciences

• The company received a warning letter for its Roorkee, Uttar Pradesh, facility on March 8, according to its filings. That will withhold approval of new drug filings till the company resolved the issues raised by the FDA. The regulator classified the plant as official action indicated in December, following the inspection in August 2018.
• The company's plant in Nanjangud, Karnataka, was classified as ‘official action indicated' on March 21, with the FDA saying it could withhold approval of pending applications or supplements made there. Nomura, raising concerns on the drugmaker's ability to handle regulatory issues, had said a warning letter can't be ruled out.

Lupin

• The drugmaker received a letter from the U.S. FDA classifying the December inspection at its Mandideep (1) facility in Madhya Pradesh as ‘official action indicated', according to its March 13 filing. The regulator may withhold approval of any pending applications or supplements from the plant.
• On March 16, Lupin said its U.S.-based Somerset facility also received the similar status. Macquarie estimates that the facility contributes 12-15 percent of its total sales and around 20 percent of Lupin's pending drug filings.
• CLSA said the probability of a warning letter has increased for its Somerset (New Jersey) plant.
• In all, four Lupin facilities are under FDA scrutiny—including one each in Goa and Indore, Madhya Pradesh.

Dr. Reddy's

• The company received 11 observations for its key Bachupally, Telangana, plant—four repeated from a 2017 inspection and one dating back to 2015. The facility, which Morgan Stanley estimates accounts for 40-50 percent of its U.S. sales, was inspected between Jan. 20 and Feb. 8.

Aurobindo Pharma

• Its unit 1 making pharma ingredients at Telangana received six observations after an inspection in January. Unit 9 received five observations while pharma ingredient unit 11 got three.
• The company, however, received clearance for its unit 4 that makes injectables.