USFDA inspections of Indian sites still below pre-Covid-19 levels

With US Food and Drug Administration (USFDA) scrutiny of Indian pharmaceutical (pharma) plants rising, analysts point out that Indian sites have had a 9 per cent share of total global inspections. While the pace of inspections has been on the rise since calendar year 2020 (CY20), it’s still significantly below pre-pandemic levels.

According to an analysis by India Ratings & Research (Ind-Ra), Indian pharma was exposed to an average of 9 per cent of overall global inspections from calendar year 2009 (CY09) to the first quarter (Q1) of 2022-23 (FY23).

“According to USFDA data, Indian pharma was exposed to an average of 9 per cent of inspections over CY09 through Q1FY23, compared to the US at 61 per cent. This is despite Indian companies having the second-largest number of USFDA-approved plants (both active pharmaceutical ingredient, or API, and formulations), the largest number of abbreviated new drug application filings (required for formulation) market share (35 per cent), the largest number of drug master file filings (required for API; market share about 50 per cent), and a volume share of 40 per cent in the US generics market,” Krishnanath Munde, associate director at Ind-Ra, told Business Standard.

Ind-Ra believes that the USFDA scrutiny of Indian facilities is part and parcel of the industry.

But India is not alone.

Munde added that although players have scaled down their US operations, it remains an important pharma market for India, accounting for nearly one-third of the sales of the top drug firms.

Indian companies have significantly increased their presence in the US over the past two decades. The overall business now focuses on specialty generics in the US.

For instance, Zydus Lifesciences posted US revenues of Rs 3,709.2 crore in 2016-17 (38 per cent of consolidated revenue), which grew to Rs 7,445.1 crore in FY23 (43 per cent of overall revenue).

Indian companies have significantly increased their presence in the US over the past two decades, and the overall business now focuses on specialty generics in the US.

In a report earlier this year, Nirmal Bang said the USFDA regulatory uncertainty is the biggest concern for the pharma sector, besides the price erosion in US generics.

Also, the USFDA inspection rate is expected to increase from here on out because the number of inspections is still below pre-Covid levels.

“The expected increase in USFDA inspections is due to enhanced scrutiny as well as higher complex and specialty drug filings,” said Nirmal Bang.

Ind-Ra highlights that the likely pick-up in USFDA inspections during calendar years 2023 (CY23) and 2024, while having an impact on some facilities and entities, will be less disruptive for the sector, compared to the situation during calendar years 2015 and 2016.

“According to the USFDA data (drug quality assurance), the federal agency of the Department of Health and Human Services conducted total inspections of 428, 461, 545, and 156 in CY20, 2021, 2022, and Q1CY23, respectively, against 1,668, 1,601, and 1,558 in calendar years 2017, 2018, and 2019 (CY19), respectively (a historical average of 1,810 over CY09–CY19),” Munde told Business Standard.

He felt that the proportion of official action indicated after a site inspection is likely to revert to its historical rate of 10-15 per cent (of total inspections) and the USFDA inspections will pick up to pre-pandemic levels.