Kicking off a whole new batch of trouble for India's Emcure Pharmaceuticals, Israeli generics company Teva recalled 40,000 bottles of medicine manufactured for it by the unlisted company. Partly owned by US-based private equity investor Bain Capital, the company received an import alert in July this year which effectively banned the import of drugs from its Hinjwadi plant.
Emcure is just one of the many Indian pharmaceuticals in trouble with US regulators. Six Indian drugmakers have had their manufacturing sites blacklisted by the FDA, this year alone. Currently, there are 39 drugmaking facilities in India, owned by 27 different companies that have lost their privileges due to regulatory problems. Indian companies make around 30 to 40 per cent of the generic medicines taken in the States. However, they now face massive credibility crisis due to western regulators' concern over their manufacturing practices. New Delhi-based Ranbaxy Laboratories was fined $ 500 million in 2013, by the US Department of Justice after pleading guilty to charges on selling adulterated drugs, failing to report that drugs did not meet specifications, and making false statements to the US government. Japanese company Daiichi Sankyo which had bought Ranbaxy, took a $ 3.7 billion write down on the acquisition 6 months later.
“Trust has eroded so much among foreign regulators, I don’t think they take anything that’s said at face value,” warns Dinesh Thakur, the whistle blower in the Ranbaxy case, who now runs a consultancy focused on the pharmaceutical supply chain. D G Shah, secretary of the Indian Pharmaceutical Alliance, an association of India’s top drug companies, acknowledged that the industry is struggling to meet stringent US standards. He said this reflects the inadequate training of lab technicians and supervisors, rather than any deliberate attempt to manipulate or falsify data by the companies’ management.
Murali Neelakantan, former general counsel for Cipla, agreed that the Indian laboratory practices raising concerns among regulators have deep roots, but that it is an “organisational culture issue” for companies to train and incentivise their workers to follow global best practices, including sounding the alarm when tests point to quality problems. “Indians as a rule don’t like to say no, and don’t like to give bad news and therefore test results always have to come out good,” he suggests. “You know what the test is supposed to say and you try to show that.”
