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Bad medicine?: Weak domestic regulation is affecting the Indian pharma sector -
Bad medicine?: Weak domestic regulation is affecting the Indian pharma sector
Amber Pabreja | Published: 12 Apr, 2017  | Source :

Indian pharma companies have not had a great couple of quarters. US FDA observations are on the rise, and pharma companies in India have been slow to address these. Of the 42 warning letters sent out by the FDA office on manufacturing quality issues over the last year, nine were addressed to Indian facilities.

The share price of Indian pharma firms have taken a beating thanks to the steady drip of negative news from FDA observations and warning letters, the most recent being Divi's Laboratories, which sunk near its 52 week low after an import alert was issued against the company's Vizag facility. The FDA is ramping up its inspections of facilities in 2017, and as a result these issues are likely to rise.

Quality issues in Indian pharma, says FDA

FDA's associate commissioner Mary Valdez pulled up Indian pharma, writing that “Quality issues are an ongoing challenge." According to Edelweiss, about 55% of the GMP (good manufacturing practices)-related warning letters issued by FDA's Centre for Drug Evaluation and Research were to facilities in India and China. However, just one out of the total nine resolutions during the period was from India/China, which means that pharma companies in these countries have been lax in addressing concerns.

The number of warning letters from the FDA year on year has also increased. In 2012, just two warning letters were issued to Indian facilities - to Sun Pharma. In 2016, nine were issued, to Wockhardt, IPCA Labs, and others.  Warning letters from the FDA typically take over a year to resolve - Cadila’s manufacturing unit’s warning letter is nearing resolution over 400 days after it received the letter, as is Sun Pharma's.

The major reasons FDA cites for these warning letters is inaccuracies, fudging and errors in documents and bad data integrity, which points to weak domestic regulation in the industry. It is a cause for embarrassment that a non-Indian regulator is needed to protect consumers – Indian and American consumers - from bad Indian practices that endanger their health.

Litigation hits, launch delays

Pharma companies are also facing other challenges while targeting the US market. Dr. Reddy's management said that it is expecting a weak Q4, due to a drug launch delay, and after it received an unfavorable ruling in a US court in the patent infringement case over anti-nausea injection Aloxi. Biocon is also reeling from high R&D costs and limited payoff for recent launches. Its much hyped trastuzumab biosimilar has lost buzz with Roche, the original manufacturer, now launching a compound trastuzumab medication that it says will be more effective. The exceptions here are Natco Pharma, with its Tamiflu generic selling strongly during flu season through January and Feb, as well as Glenmark, with its exclusivity for Zetia generic sales. Elsewhere, things are less rosy.


About Amber Pabreja
Amber Pabreja is the CEO of, an analytics platform that works to simplify investing for retail investors. He's a computer science engineer from NIT Calicut and IIT Kanpur, and has over 14 years of work experience in building complex tech platforms and products at Veritas, Wipro-Cisco Development Facility, and Tejas Networks. His interests are in value investing and overall macro-economic trends.

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Disclaimer: The author has taken due care and caution to compile and analyse the data. The opinions expressed above are only the views of the author, and not a recommendation to buy or sell. Neither the author nor accept any liability whatsoever arising from the use of any of the above contents.