Import alerts unlikely to impact pharma exports to US

Rising product approvals suggest little long-term impact despite import alerts

While import alerts are on the rise after several manufacturing facilities have come under scanner, analysts and industry insiders, however, feel that there would not be much impact on the existing US exports from India as product approvals are also on the rise. Moreover, as most of the facilities that have come under scanner are bulk drug making units.

As per a latest report by India Ratings & Research, estimated impact on the existing exports revenue to be around 7-8 per cent of the total exports to the US, and around two per cent of the overall 2013 pharmaceutical exports from India.

The head of a major multinational pharma company based in Gujarat that also exports to the US market said, "While it is very difficult to gauge the exact impact of USFDA action on Indian exports, however, in the long run Indian pharma's growth trajectory in the US markets is unlikely to be de-railed. Product approvals are on the rise, and also most of companies that have been impacted by import alerts are engaging consultants to fool-proof their processes, especially documentation related matters."

Indian companies accounted for 39 per cent of all abbreviated new drug application (ANDA) approvals in 2013. He also pointed out that most of the USFDA issues have not been related to the quality of the drug exported, but more about sloppy documentation, record keeping etc. Analysts too feel that such issues could be easily sorted out through some capacity building and investments on the part of drug exporters.

A Mumbai-based analyst felt that not much investment would be required by drug makers to ensure that quality assurance processes were in place as well as putting in place a culture of compliance.

A senior official in the Pharmaceuticals Export Promotion Council of India (Pharmexcil) said, "India accounts for more than 40 per cent by volume of all generic drug imports by the US, and this has been growing steadily over the past few years. One of the reasons it has happened is that the quality of our drugs is good and also consistent. There are not major issues related to quality. However, there are some issues related to paperwork."

USFDA issued import alerts against 21 Indian manufacturing facilities during 2013, including those of Ranbaxy Laboratories and Wockhardt Ltd, while so far in 2014 has issues import alerts against two Indian facilities including an active pharmaceutical ingredients (API) or bulk drug making facility of Sun Pharma. In comparison, a total of seven Indian facilities were under US import alert in 2011, and nine in 2012, and 32 in March 2014.

To put things in perspective, the import alerts issued against Indian plants in 2013 accounted for 49 per cent of the total 43 such import alerts issued by the USFDA worldwide. As per India Ratings analysis, "The import alerts have so far not reduced the Indian pharmaceuticals exports to the US by a substantial amount, which grew 14.2 per cent year-on-year in 2013 to Rs 22,500 crore. India Ratings expects the impact on the existing exports revenue to be around 7-8 per cent of the total exports to the US and around 2 per cent of the overall 2013 pharmaceutical exports from India."

The industry, however, feels that the import alerts on Ranbaxy and Wockhardt, could, however, have some impact. "A significant impact is expected in case of Wockhardt and Ranbaxy, which would lose most of their US revenues and also longterm opportunities," said an industry insider on grounds of anonymity.

On the other hand, the India Ratings report pointed out, "Most of the manufacturing sites which came under the FDA import alert in 2013 and first quarter of 2014 were small API manufacturers. Sun Pharma's Gujarat-based API unit that came under FDA import alert in March 2014 accounts for below 1 per cent of the company's revenue."

It could be mentioned here that Sun Pharma this week recalled around 400,000 bottles of its anti-depressant and anti-allergy drugs in the US as they failed to meet specifications.

While Sun could not be reached for a comment, local industry feels that this is a routine matter of recall, and can be considered as 'business-as-usual' for exporters.