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NEWS 1

SUN PHARMA’S HALOL PLANT TO GET CLEARANCE SOON

In a major relief to India’s leading drug maker Sun Pharmaceutical Industries, the US drug regulator Food and Drug Administration (FDA) has given a satisfactory report card for one of the key manufacturing plants that was earlier found to flout minimum quality standards.

The inspection team, which inspected the facilities between February 2-23, gave a ‘voluntary action indicated’ (VAI) remark to Sun’s Halol plant in Gujarat. The plant had been struggling with manufacturing standards since 2014. This plant is very crucial for Sun Pharma and its future export plans to the US.

A VAI inspection classification, according to the FDA, indicates that although investigators found and documented objectionable conditions during the inspection, FDA will not take or recommend regulatory or enforcement action because the objectionable conditions do not meet the threshold for action at this time. The remark means the facility is considered to be in a minimally acceptable state of compliance with regards to current good manufacturing practice (CGMP) and if not corrected, the same or similar conditions could lead to a future inspection being classified as “official action indicated” (OAI). However, troubles are not over until the FDA closes the case and gives a clean chit to resume exports to the US, said experts.
The Halol plant was slapped with a warning letter in 2015, barring the firm from exporting products from this plant to the US. At that time, the plant was contributing close to 15 per cent of Sun’s overall revenues and over 20 per cent of its US earnings. A re-inspection in 2016 at the unit was not satisfactory for the FDA to give a clean chit.

Sun’s another unit at Karkhadi was also slapped with a warning letter in March 2014. A clearance in the short term for Halol will help Sun Pharma to start filing complex generics and new key products from this plant with the US FDA.

In the latest inspection, there were only three minor easily rectifiable observations, like rough, cracked and uneven surfaces that made cleaning difficult, unclean gaskets and deficiencies in the written procedures for some machines.

NEWS 2

PHARMA INDUSTRY IN INDIA: FROM GOVERNMENT POLICIES TO FUTURE CONCERNS:

India is the largest provider of generic drugs globally with the Indian generics accounting for 20 per cent of global exports in terms of volume, according to pharma industry experts. The country is more focused on quality of drugs and medicines. Government is also working in the same context and can be seen centering more on policy making. This is overall constructive for the healthcare sector of the country, said the experts.

Current status of pharma industry

The current status of pharma industry in India is decent. However, there are ongoing changes in policy which can lead to confusion in business. “Government keeps on changing guidelines which may obscure manufacturers but it’s a good sign also as we are moving towards better side of India. If we look at wider perspective, the world can be divided into three kinds of countries – highly regulated, semi-regulated and non-regulated. Every country has its own policy and way of dealing with the industry”, said Sanjeev Gupta, Managing Director, Kusum Group of Companies.

The Indian pharma industry gained prominence since 1970s but manufacturers were not bothered about standards that time. The scenario was diverse, anybody came up to establish plants and manufacture them. 48 years have passed now and currently the country is concentrating more on regulation of drugs.

Government policies and pharma industry

The standard of manufacturing facilities should always be retained. According to Mr. Gupta, there are many encounters which the pharma industry often faces. In this pursuit, there may be conciliations with standard of drugs. However, the government is now working more on standards.

“Pharmaceutical industry is not a commodity. We should be focused more on standard and quality of the product. This is what the government is doing now. Government is more engrossed on policy making. They are taking resilient decisions for the concern of pharma industry. There may be ifs and buts but government is looking forward to work on criterion more which is a good symbol”, added Mr. Gupta.

“There are mammoth opportunities in India. India is a good exporter of generic business and we have also taken a big jump recently. There are many people in small towns and villages who are not getting proper medicines. Government is trying to disentangle the concerns of these locations”, he further said.

 

Threats to pharma industry

According to pharma industry experts, standard of the drugs is the only concern for the market. There are no basic threats to pharma industry in India. 70 per cent of pharma market is generic, 9 per cent is oriented and rest 21 per cent is over-the-counter (OTC) which is acceptable.

 

India’s healthcare budget is less. The country spends only a small part of GDP (Gross Domestic Product) on healthcare while in other countries 4-5 per cent of GDP is outlaid on healthcare. There are no threats as India is working systematically.

Future concerns of pharma industry

India should become part of PIC/S (Pharmaceutical Inspection Co-operation Scheme). The Pharmaceutical Inspection Co-operation Scheme (PIC/S) is a non-binding, informal co-operative arrangement between Regulatory Authorities in the field of Good Manufacturing Practice (GMP) of medicinal products for human or veterinary use.

“All FDAs (Food and Drug Administration) are part of PIC/S which ensures that all manufacturing is part of the system as well. Small countries like Vietnam and Uzbekistan which don’t even have 5 factories want to become part of PIC/S now. India is also not the part of this society. India is doing a generic business and we are contributing to around 20 per cent medicines of world. This means every fifth tablet created in India is used worldwide. In this scenario, it is important that we become part of the PIC/S. We are part of WHO (World Health Organization) reality but it is not essential for all the industry. PIC/S is more important for us. I am sure in future we will become part of the system”, said Mr. Gupta.

 

COMMENTSChina recently exempted import tariffs (duties) for 28 drugs, including all cancer drugs, from May 1, 2018. This may impact Indian pharma sector too. In words of Mr. Gupta, “The impact may not be immediate as people are not keen to go to China. There is language barrier and recession process is tough. It will take at least 5 years to establish.”

NEWS 3

PHARMA INVESTORS SHOULD BRACE FOR ANOTHER STORM ON DRUG PRICING:

Investors in pharmaceutical stocks should brace for more uncertainty in drug pricing. The government is planning to link price increases for drugs, even those that are not under price control, to the Wholesale Price Index (WPI) or to a special index for medicines. If implemented, it will replace the current system of a 10% cap on price hikes in a year for drugs that are not under price control.

 

Is tighter regulation justified? Are pharma companies rushing to increase prices, and thereby hitting the annual price cap?

 

Retail pricing data from AIOCD Awacs, a market research agency, suggests otherwise. In fiscal year 2018 (FY18), the pharmaceutical market grew by 5.7% in value terms, with price change at minus 0.8% indicating a decline. Volume growth and new products contributed largely to the increase in revenues.

 

But we are more concerned with the non-NLEM segment or drugs outside price control. NLEM refers to the National List of Essential Medicines.

 

Non-NLEM sales rose by 7%, growing ahead of the market; but again, price growth was only 0.5%. So price hikes played a very small role. Of course, the impact of pricing was unusually low last year. In the previous two years, prices grew by around 5%, but even in those periods, volumes and sales of new products together contributed more to revenue growth (see Chart 1). Overall, price growth has not been the overwhelming reason driving sales growth in the past three fiscal years.

 

Still, the overall picture could hide pockets of high price growth. Looking at different therapeutic categories, the top 10 non-NLEM categories showed a price change in the region of a decline of 0.4% to an increase of 1.3%. In FY17, when overall prices rose by 5.1%, the price increase of these categories varied from 2.8% in anti-infectives to 6.6% in dermatology (see Chart 2). Companies are staying well below the 10% limit in all categories.

 

What about at the brand level? Of all the non-NLEM drugs in the AIOCD Awacs database with a price increase of 1% or more in FY18, 89.3% saw a price hike in the 1-5% range, 5.6% in the 5-10% range and 5.1% in the 10%+ range. Combined with the category- level data, there does not seem a situation where high price increases are a norm.

 

The move to cap price hikes using a broad index will be a blunt tool that will restrict price increases in all categories and brands. While the 10% cap was also a broad limit, it gave enough headroom to increase prices in some brands. Capping the increase to an overall index will make it difficult for companies to take decisions specific to some categories/brands. Instead of WPI, if the government uses a specific index for drugs, that will be better.

 

The government has already identified a list of essential medicines (expanded from the original level) where it has imposed price controls. This new move leads to quasi-price control on drugs outside the essential list as well.

 

If the government approves this proposal, it adds another element of uncertainty for investors. Investors will be left judging how much the WPI (or any other index) will move to understand what kind of price-led growth is possible. The Indian market is second only to the US in importance for most Indian-owned pharmaceutical companies. The US market is already a source of worry as a tough pricing environment and regulatory action has dulled business. If India’s growth is hindered by a tighter policy grip, that could affect valuations too.

NEWS 4

UK PHARMA CHEERS EU SCIENCE ANNOUNCEMENT

The European Commission has just published its budget proposal for the next phase of Horizon, setting aside almost €98bn for Horizon Europe – which gets underway in 2021 after the current Horizon 2020 comes to an end – and will extend out to 2027.

In amongst the detail of the proposals is the snippet that the UK scientific community had been hoping for: Horizon Europe will be open to third countries, which means – in theory at least – the UK will be able to participate in the programme after Brexit.

That’s a big deal, as the programme is a key source of support for researchers through fellowships and exchanges as well as providing funding to help bring new scientific projects forward. Among the changes to Horizon 2020 is the creation of a European Innovation Council (EIC) to help selected high-potential projects develop through to the market, and there will be a greater emphasis on ‘open science’ predicated on free access to publications and data.

The Association of the British Pharmaceutical Industry (ABPI) was quick to welcome the third-party clause. Its deputy chief scientific officer, Dr Sheuli Porkess (pictured) said that “as the third biggest bio-science cluster in the world, after the East and West coasts of America, the UK’s strong science base is critical to the strength of European science.”

It’s worth noting that the European Parliament and Council still have to negotiate and adopt the proposals before they can go ahead. And while UK Prime Minister Theresa May has said in the past she would be prepared to commit funding to stay in the Horizon programme after the UK leaves the EU there still seems to be some debate about what might follow a no-deal, hard Brexit scenario, reports ScienceBusiness.net.

Earlier this week the EU’s budget commissioner Günther Oettinger suggested at a conference in Brussels that access could be dependent on allowing freedom of movement for scientists, but said that making a special case for researchers was unworkable. “A hard Brexit will finish our collaboration,” he suggested, adding that the EU would suffer from not having the UK’s involvement.

Meanwhile along with welcoming the Horizon Europe development, Porkess also re-iterated the UK pharma industry concerns about other post-Brexit challenges. “A deal on science is a good start but now we need to see the UK and EU to come to an agreement on other areas, specifically around the regulation and supply of medicines so that patients in the UK and the EU are able to get access to medicines without problems or delays after the UK leaves the EU,” she said. This week has already seen reports that Merck & Co/MSD is considering stockpiling medicines in case of supply chain disruption post-Brexit.

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