Why Are Indian Drug Makers Heading Overseas?

India’s Domestic generic pharmaceutical companies may be snubbing opportunities in their homeland in lieu of promising R&D capabilities overseas. The complaint? Too much red tape.

Indian drugmakers could have a valid argument. Last year, the country’s Supreme Court ordered the union health ministry to re-evaluate 157 clinical trials — which were already approved by the Central Drug Standard Control Organization (CDSCO) — after it found irregularities in the approval process. Subsequently, clinical trials for all new chemical entities were banned “unless they were personally vetted and cleared by the health secretary,” the Business Standard reported.

As a result, the drug approval process has nearly come to a screeching halt due to that ban, as well as other so-called “red tape,” including:

• New rules, such as the one requiring researchers to video-graph all clinical trials. R&D then becomes more difficult for more personal drug products, like contraception.
• Stringent guidelines emphasizing transparency, thoroughness, and timeliness. In just 28 days, a clinical trial could be approved in the U.S., while it could take upwards of a year in India.
• Price control of molecules is another prominent aversion to domestic R&D. “A company that develops such a delivery system may find that the molecule is under price control, and there is no way it can recover the cost of developing the new delivery system. This acts as a huge disincentive for R&D,” according to the Business Standard.

In the meantime, the CDSCO issued an order to all CROs, medical institutions, and industry trade associations, stating that all approval applications for global and new clinical trials must include the following information, effective immediately:

• An assessment as to the risks versus benefit to trial subjects
• Innovation in comparison to existing therapeutic options, and
• Unmet medical need in India

The agency states that “the requirements have been imposed as a result of an order issued by India’s Supreme Court on 21 October 2013,” according to a posting from the Regulatory Affairs Professionals Society (RAPS) website.

Needless to say, with the addition of these tighter regulatory restrictions, India isn’t quite the sweet spot it used to be for pharma, with several companies already setting their sights overseas. For example, Lupin has plans in place to open U.S. R&D plants, and Cipla says it’s investing Rs 1,000 crore to develop drugs in Britain.

In fact, it would seem the great migration has already begun. In July, India’s largest manufacturer, Sun Pharma, bought out Pharmalucence, located in the U.S., for its sterile injectable and R&D capacities. These companies are going abroad, with the belief that an improved manufacturing culture far outweighs the cost savings of keeping operations in India.