Business - Ranbaxy;Bitter Medicine

The action of the U.S. Food and Drug Administration (FDA) in blocking the import of 30 drugs produced by Ranbaxy Laboratories Limited and blacklist two of its major production facilities in India is a new setback for India’s pharmaceutical industry that has been harried for many years by allegations of patent infringement. Ranbaxy is not only India’s largest pharmaceutical manufacturer; it is one of the world’s leading generic companies with a presence in 23 of the top 25 pharma markets. This is the second time since 2006 that the company has been issued warning letters by the FDA. This follows the commencement of an enquiry in July by the U.S. Department of Justice into charges that included the use of pharma ingredients from unapproved sources and the mixing of approved ingredients with unapproved ones. The Indian company has strenuously defended itself against the charges and pointed out, after the latest setback, that the FDA had stated that “all drugs manufactured by Ranbaxy have repeatedly tested safe and effective with no adverse incidents reported.” There are those who believe the FDA’s sanction has come under protectionist congressional and other kinds of political pressure. But whatever be the motivation, the reality is that Ranbaxy has been found short of the stringent standards required of those who sell products in the U.S. market. The FDA warning letters do specify the deviations from good manufacturing practices that its investigators found in two of Ranbaxy’s production facilities.
Ranbaxy derives nearly a quarter of its revenues from the U.S. market and the blocked drugs are estimated to account for 40-50 per cent of the company’s U.S. sales. The larger questions are whether the FDA’s action will affect new drug applications Ranbaxy may file, and whether its troubles will adversely affect the prospects of other Indian drug companies focussed on the U.S. market. Nationalism or hyper-patriotism in such matters, including in the business media, will be misguided. Ranbaxy has done the right thing in opting for high-powered legal advice on compliance issues relating to the FDA’s letters and import advisory. The episode bears lessons for India’s regulatory system. It must not forget that it has a dual responsibility: (a) protecting Indians from the menace of spurious and sub-standard drugs and (b) preparing Indian companies to meet the highest standards of the global market. There is a wide gap between aspiring to be a global pharma player and installing systems and procedures to achieve that goal. The FDA’s latest sanction against a company that has a good reputation for the affordability and safety of its generic drugs demonstrates that the gap is yet to be bridged.