If process is product, mustn’t quality be top of strategy in Indian pharma?


In the tsunami of Bihar election news, a significant development got swept away last weekend. It was the announcement by Dr Reddy’s Laboratories that three of its manufacturing plants in India had received US FDA warning letters. Today, Mint reports that the American regulator has sought third party audit across the pharma company’s entire network.


It’s shocking because chief executive GV Prasad has been working hard at improving things which has even led to DRL’s “cost being higher than others in the industry”. In a conversation in May 2013, he had said, “One of the criticisms of my management style is that I don’t focus enough on performance as much as I focus on improving things. I accept this criticism.”


It’s a serious blow to India’s second largest drug maker. Before a section of the community starts playing the victimization card – like we saw in the case of GVK Biosciences – let’s understand that FDA supervisions have indeed grown more stringent and will continue to be so as US derives more and more of its generic drug supplies from manufacturers outside its geographical territory.


“Earlier it used to be an audit, now it is an investigation. Once the FDA inspectors get hold of the computer [that stores data], they take charge of it and ask everyone else to leave the room. Data integrity of manufacturers is uppermost in their minds these days,” a drug company chief told me yesterday.


What is surprising, and even smacks of smugness, is that pharma companies saw it coming and yet did not do enough. The Generic Drug User Fee Act of 2012, which was in the making for a while and hence well-known to Indian manufacturers, made it obvious that the US regulator would inspect non-American facilities with the same rigour as it did the local, generic or innovative drug makers. Some of the American generic companies argued that the number of foreign facilities had soared but the FDA inspection hadn’t. Still, most Indian companies did not adequately invest, rather did not radically overhaul their quality compliance culture which, as all management gurus will tell us, has a long tail, down to the last employee standing.


greenberg-magic-bullets-580To recall, it was rampant quality standards violation, among a few other things, that killed Ranbaxy brand, once upon a time India’s most valuable and a truly global brand.


In early 2013 when Arun Kumar sold Agila to Mylan for a handsome $1.6 billion in an all-cash-deal, he distributed $50 million among employees. When I asked if he had any particular reason of this generosity, he told me:  “We are in a highly compliance-driven business and it is people who make quality and compliance possible.” Still, Mylan-owned Agila received FDA warning letters for two of its plants in August this year.


It’s a no-brainer that quality, like innovation, should be part of a company’s culture, not just strategy and the unsung heroes upholding quality must be celebrated like the all-important sales team. Earlier this year GVK Biosciences got a severe knock when the European regulator banned hundreds of drugs whose clinical studies were done by the Hyderabad contract research company. It was the biggest ban of its kind in Europe and the loudest slap that the Indian contract research community has received on its reputation ever. Just when the EMA ban began generating political spins, one senior executive from that industry told me that “a disgruntled employee must have tipped off the regulators”.


Sure enough, a few months later The Hindu reported that “disgruntled employee’s” saga. (GVK contradicted it, though.)


greenberg-magic-bullets-580A somewhat similar incident broke Shantha Biotechnics back in 2010 when it, along with a few other vaccine makers, lost large WHO contracts. Shantha lost contracts worth $23.7 million and took a reputation hit from which it could not recover until after Sanofi decided to invest more and increase its ownership further.


Late last year when I asked Varaprasad Reddy why he neglected quality which brought  that rap from international agencies, he narrated a few stories (which I cannot reproduce fully because I have not verified with other parties) which can be summed up as some employees messing with the manufacturing processes and tipping off a few in the decision-making positions.


“It was unwarranted harsh decision by the WHO at that time especially because a few other manufacturers’, whose vaccines had caused a few deaths, pre-qualification was not cancelled. We got a letter saying our vaccine had white sedimentation which went away by rigorous shaking. There was no specification about how many times one had to shake or if it was happening to refrigerated vials. Many recombinant products gather white sedimentation on refrigeration but it goes off by shaking,” Reddy told me.


I bring this instance up only to stress the fact that quality standards and compliance in healthcare products will get more and more complicated as we move from synthetic (chemistry-driven) drugs to biosimilars (biology-driven) to living cells themselves – so-called cell therapy as gene editing science gets more precise — where process IS indeed the product.


Most big-to-mid size pharma companies in India maintain different plants for different markets. It’s understandable that quality has its cost but it would serve them in the long run if they just have ONE QUALITY for all markets. Indian regulators have lower bars for impurities but I wonder who will ever do any study in India to figure out what these impurities in drugs for chronic diseases – which are taken for decades – do to our bodies eventually.


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