The growth of the Indian generics industry has been startling. India is already the world's largest exporter of generics, selling almost $16.5 billion worth last year alone. According to a recent analysis, the number of Indian generics approved in the U.S. is rising steadily, and already up to 40%. It's a trend that is reshaping the industry, putting pressure on multinational generic drugmakers like Teva Pharmaceuticals Industries Ltd. and Mylan N.V.
The lures of Indian generics are much lower costs and comparable quality. India’s pharma sector is hungry for more, but a key hurdle is defining "comparable."
"It's referred to as the 'quality cloud,'" said Makarand Jawadekar, a consultant who has helped companies such as Pfizer Inc. strike partnerships in India and other countries. "The facilities are not inspected as often as in the U.S., and the companies often have more warning of when the inspectors are coming," said Prabir Basu, also a pharmaceutical consultant. "There are also concerns the Indian plants may not have enough qualified personnel."
In response, India has been taking new steps to reassure consumers and drug developers that the quality of its manufacturing is as good as anywhere.
In 2016, the Drug Controller General of India (DCGI) sought to make it mandatory that all drug manufacturers could only employ workers holding a formal degree or who had been certified by the government’s Life Sciences Sector Skill Development Council. Workers who don't meet those standards would have to be let go by January 2018. Just recently, Indian drug manufacturers asked DCGI for another year to meet this goal because of worries over staff losses and potential litigation. There is also concern that it is unreasonable to expect all the required certifications to occur on this timeline.
But it is hoped that through steps like the worker certification program, India will become a more influential partner in organizations such as the International Council for Harmonisation (ICH) and the Pharmaceutical Inspection Cooperation Scheme (PICS). Already, India has the highest number of U.S. Food and Drug Administration staff present of any country outside the U.S.
"The trend of outsourcing to India and China has been even more noticeable over the last couple of years," said Basu. India's pharmaceutical industry is estimated to be worth $30 billion or more, and is the world's third largest market in terms of volume. While most India-manufactured drugs that are sold in the U.S. and Europe are generics, these companies also serve the global pharmaceutical market, including Russia, South Asia and Australia.
"The cost of active pharmaceutical ingredients and drug manufacturing in India can be 30% to 40% cheaper than in developed countries," said Jawadekar.
As a result, many U.S., European and other genetic manufacturers outsource this task to Indian contract manufacturing organizations (CMOs). There is now a trend toward buying active pharmaceutical ingredients, or APIs, from China, where they can be made even more cheaply, but still making the actual drugs (i.e. tables, capsules, etc.) in India. "It’s still preferred to manufacture in India rather than China," Jawadekar explained.
"The pharmaceutical manufacturing sector in India has been growing very fast," added Basu. It is also highly competitive now, with many companies vying for customers and employees. "There are reports that there is a shortage of qualified people," he noted.
The cGMP regulations for drug manufacturing in India are just as strict as they are in the U.S. and Europe, said Jawadekar. "The question is making sure the manufacturing companies comply with them." For reasons like this, the FDA has issued nearly 90 warning letters to Indian drug manufacturers since 2011, according to a report by Edelweiss Research. Part of the reason is the rising number of inspections of Indian facilities by the U.S. FDA.
In one particularly striking episode, an Indian drug manufacturer told the FDA its staff had gone on strike and blocked the entrance to its Gujarat-based facility, leading the FDA to cancel its planned visit. Later that summer, Vikshara Trading & Investments Ltd. sent the regulator photos of protests and resignation letters purporting to be from employees. The strike and supporting evidence were all a charade by the drugmaker to keep inspectors away.
Whether India can overcome embarrassing incidents like that and go forward to sweep the generics manufacturing field is yet to be seen. But erasing the "quality cloud" will be a deciding factor.