Drug recalls in the US add to Indian pharmaceutical companies' woes

As Indian pharma firms, which account for 40 per cent of the generic medicines sold in the US, see a rise in drug approvals, analysts point out that the rate of recalls, too, is on the rise. 

This month, anti-hypertension drugs of two Indian drug firms (Torrent Pharma and Hetero Laboratories) got added to the recall list by the US drug regulator for valsartan products for containing a potentially cancer causing material. In August, Mumbai-based Lupin, too, initiated recall for its hypertension tablet for containing foreign substance (metal contaminant). Lupin’s recall is not part of the Chines API issue. 

Earlier this week, Torrent Pharmaceuticals voluntarily recalled 14 lots of tablets used for treatment of high blood pressure and cardiac issues from the US market as it contained 'impurities'. An impurity was detected in the active pharmaceutical ingredient (API), manufactured by Zhejiang Huahai Pharmaceuticals in China. 

The impurity detected in the API is N-nitrosodimethylamine (NDMA), which is a substance that occurs naturally in certain foods, drinking water, air pollution, industrial processes, has been classified as a probable human carcinogen, according to International Agency for Research on Cancer classification. Earlier this month, Hetero Laboratories' valsartan products, too, were added in the recall list for containing trace amounts of NDMA by the US Food and Drug Administration (USFDA). 

Analysts say that this essentially means that the companies will have to change their source for the API, take fresh approvals for the product containing the new API and then relaunch it in the US market. Torrent Pharma has already stopped sourcing valsartan from Zhejiang Huahai Pharmaceuticals. 

“We have stopped sourcing valsartan from this firm. This issue has and is being discussed with them. This is a Genotoxic impurity, which was not known to us,” the company spokesperson said. As a precautionary measure, the company has decided to check genotoxic impurities for all sartans (a category of drugs) and would do all possible tests on API suppliers before moving into commercial use. 

Deepak Malik, analyst with Edelweiss, says that this will not mean a significant revenue loss for the company, around $1-2 million for the entire year. Apart from the Chinese API issue, major drug firms such as Sun Pharma, Cipla, Dr Reddy's, and Glenmark have initiated recalls in the past few months for various reasons. In the past few months, at least eight or nine recalls by big firms had been initiated in the US market. 

The year 2017, too, had seen firms such as Lupin, Cadila Healthcare US arm, Dr Reddy's recall batches of medicines. Lupin had three recalls between July and September 2017. In fact, 2016-17 saw 54 recalls by drug firms, up from 24 in 2015-16.

Ranjit Kapadia of Centrum Broking said the rate of recalls were rising as approvals were also rising with time. "We supply 40 per cent of the generic medicines sold in the US. So with the rise in volumes, issues with production would also increase," he said. The reasons behind recall could vary from contamination (cross-batch, air-borne, dosage mix up, container, impurities) to wrong labelling, discolouration of tablets, non-standard quality, etc. Analysts point out that these are instances of opportunity lost. Kapadia says that while the overall impact on top line and bottom line are often not significant as companies simply replace the contaminated batch with another one, however, the process takes some time and that is the window of opportunity lost.