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 India's $15 billion pharmaceutical industry, which has been hit by a
spate of regulatory sanctions in the past year due to concerns about
production processes, supplies about 40 percent of generic and
over-the-counter drugs to the United States.
The FDA implemented the Generic Drug User Fee Act (GDUFA) program in
October 2012, giving the agency the right to collect fees from
manufacturers to expedite the approval for sale of generic drugs.
But the agency has not made as much progress with clearing the
existing backlog of applications for cheap copycat drugs as some
Indian manufacturers had hoped, company executives said, which is
now beginning to drag on sales in the United States.
A rise in the number of filings for new generic drugs from India and
elsewhere, and the need to step up inspections of production
facilities before giving final approval, is putting pressure on FDA
resources, adding to the backlog, analysts said.
While the FDA is hiring more staff and looking to speed up the
process, Indian pharmaceutical industry executives say the pace of
approvals is unlikely to pick up until 2016.
Leading Indian generic drugmakers Dr Reddy's Laboratories Ltd and
Glenmark Pharmaceuticals Ltd this month posted a drop in their
second-quarter U.S. sales, blaming the slowdown in the approval
process.
"The U.S. has been challenging in this year because of the
significant slowdown in product approvals. The remaining half of
this financial year will remain challenging for the industry,"
Glenmark Managing Director Glenn Saldanha told Reuters.
APPROVAL LAG TAKES TOLL
Sun Pharmaceutical Industries Ltd, India's largest drugmaker by
revenue, and Cipla Ltd, both due to report their quarterly results
on Thursday, are also expected to be affected by the slowing
approvals, analysts said.
While Sun Pharma is expected to report a 17 percent rise in net
profit for the second quarter, helped by a pick-up in sales in its
home market, Cipla is expected to report a 7 percent drop in the net
profit.
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"The (FDA approval) process will be streamlined with a lag, and that
lag is still taking a toll on most companies," said Siddhant
Khandekar, vice-president of research at brokerage ICICI Securities.
"The implementation has already started, but we will probably see
normalization only by 2016."
FDA spokeswoman Sandy Walsh said the agency was on track with the
implementation of the GDUFA and was "maintaining pace with
historical performance". The FDA approved 45 new drug applications
in August and September 2014 each, which was more than the monthly
average for 2012 and 2013, she said.
"We remain committed to utilizing all available resources to ensure
expeditious and complete (new application) reviews."
By 2017, the FDA aims to bring down the review time to 10 months
from about 30 months now. For applications submitted in the year
starting October 2014, the FDA has set a target to complete review
of 60 percent within 15 months.
Some Indian generic drugmakers are, however, uncertain about the
pace of approvals in the near future.
"Our inventory is lined up in the United States in anticipation of
approvals, and we expect them to come in by January, if not
December. But it is not in our control," Dr Reddy's finance chief
Saumen Chakraborty said.
(Writing by Sumeet Chatterjee; Editing by Alex Richardson)
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