Recently announced regulatory
action against Indian and Chinese companies is creating a significant
imbalance in the global supply chains of APIs. This imbalance is likely to open
opportunities for other companies in Asia, and may also drive manufacturing back
to Europe and the US.Last week, three companies – one in India and two in China – ran into problems with European regulatory agencies due to inspections conducted at their facilities. Data falsification, a problem recurring in Asia for the past few years, raised its ugly head yet again. The three companies that received non-compliance reports were
plagued with problems similar to those seen in the past at the Asian operations
of Ranbaxy,
Wockhardt,
Zhejiang
Hisun, Novacyl
etc. The European
regulatory actionTake the case of Jinan Jinda Pharmaceutical Chemistry, China, where an inspection was conducted on
June 26, 2015, by the Italian Ministry of Health. An unofficial and
non-controlled storage area containing mainly raw materials and finished
products was made inaccessible to the inspectors. Since the door of the area had
been removed and replaced with a panel fixed with screws to the wall, the inspection
team concluded that there was a serious risk of data falsification. At Parabolic Drugs, India, where an inspection was conducted by the Italian Ministry of Health on June 17, 2015, the inspectors found the quality management system to be seriously uncontrolled and deficient in almost all “principles” mentioned in the EU’s Good Manufacturing Practices (EU-GMP) guidelines. Falsification of data and documents along with integrity and security of data in the quality control laboratory were among the observations listed in the non-compliance report.Similarly, at Wuxi Jida Pharmaceuticals, China, inconsistent and conflicting answers were received from the personnel and the management. The fact that answers were modified according to the inspectors’ requests and that documentation was shown in an ambiguous way led the Italian inspection team to conclude that the company did not comply with the requirements of EU-GMP.The Certificates of Suitability (CEP/COS), given to certify
that the material complies with the requirements laid down in the relevant
monograph of the European Pharmacopoeia, of these three companies were
suspended. A sense of urgency in
EuropeThe time between the Italian inspections and issuance of the
non-compliance report was less than six weeks. This turnaround is quite
remarkable, considering this is peak holiday season in Europe.Last week also witnessed the US FDA, which has historically
been more active compared to the Europeans, issue a warning
letter to Mahendra
Chemicals in India. During a May 2014 inspection, the US FDA inspectors found employees had completed batch
production record entries days after operations had ended. Moreover, they
released lots before proper approvals, and failed to maintain original
manufacturing data for critical steps. Investigators found backdated batch
production records, signed by the Technical Director, who stated he was not in
the facility on the dates when the records were signed. Even though such
glaring concerns related to data integrity were observed, it still took the US
FDA over a year to issue the warning letter; substantially longer than the six
weeks taken by the European regulatory agencies.However, the speed of the issuance by the Italian Ministry
of Health is not drastically different to the Romanian Health Authority, which
issued a non-compliance
report (NCR) to Zhuhai United, China, in June 2015, for an inspection held
in April. Similarly, the Slovenian Health Authority issued an NCR
to Polydrug Laboratories, India, within three months (the inspection was held
in March this year). In the case of Huzhou
Sunflower, China, the French health agency issued an NCR in March, while
the inspection was held in January this year.The recent EU ban on 700 generic medicines due to
manipulation of clinical trials at Indian GVK Biosciences, is yet another case
which highlights the recent action taken by the European regulatory agencies
(read our previous analysis: Will
data integrity concerns on clinical trials done at GVK Biosciences go beyond
Europe?). New market opportunities
in an imbalanced supply chainThe outcome of these inspections create market opportunities for other competing firms. Jinan Jinda’s inspection was focused on an antibiotic used to treat urinary tract infections – known as Nitrofurantoin.
Post the inspection, Jinan is prohibited from supplying Nitrofurantoin
to the European market.As per the PharmaCompass database, Jinan Jinda is one of the three holders of a COS/CEP for Nitrofurantoin and the recommended suspension of their COS/CEP is an opportunity for the other two COS/CEP holders – global generic major Mylan Laboratories
and Indian company, Unimark
Remedies. In addition to these companies, FIS
Fabbrica Italaina Sintetici and Cambrex
Profarmaco, both based in Italy, are also active in the business of
supplying this API. Unlike Jinan Jinda, which only had one CEP filing, India’s Parabolic Drugs
produces multiple antibiotics, although not at the scale of global majors Sandoz, Fresenius
Kabi and DSM.
A suspension of 11 active CEPs, which had been granted to Parabolic, does seem
to indicate an apparent shift in the supply chain of APIs. However, the suspension of Parabolic’s CEPs means that for antibiotics like Pivampicillin, there are no suppliers left who have a valid CEP. Parabolic’s inability to supply the market with products like Dicloxacillin
Sodium, for which the inspection was conducted, is an opportunity for Sandoz, Aurobindo
Pharma and the Italian operations of Fresenius
Kabi – all of whom are integrated manufacturers and are not specialized API suppliers. For another antibiotic Bacampicillin, following the suspension of Parabolic Drugs, Fresenius Kabi’s Italian operations will be the only supplier left with a valid CEP.With Sandoz’s recent announcement of their plant shut down in India and the fate of Ranbaxy’s manufacturing operations being uncertain, under the new management of Sun
Pharma, the supply options for CEP grade Cefopodoxime
Proxetil get reduced substantially and are now dependent on just two plants
-- Hanmi
Fine Chemical in Korea and Sandoz’s Austrian operations. The situation thus created is not drastically different to
the one resulting from the inspection
failure of North China Pharmaceutical Group Semisyntech, which left Sandoz
as the only manufacturer of Benzylpenicillin
Procaine (this was before Novartis announced the shutdown of their
Frankfurt facility).PharmaCompass has summarized a list of all CEPs for the 12
products (11 of Parabolic and 1 of Jinan Jinda), in case our readers want to assess
the status of their overall supply chain in view of the recent inspection
outcomes (please click here to send
us a request). Our viewWhile the US FDA inspectors have historically been more active,
the recent months have shown a sense of urgency on the European side as well. The era where companies were securing their supply of APIs
by looking for low-cost players in Asia appears to be waning away.In our view, inspection outcomes like these may well drive
manufacturing back to Europe and other countries where the cost of
manufacturing has historically been high. The devaluation of the Euro, coupled
with the speed with which regulatory action has been taken on these Indian and
Chinese firms, seem to suggest that trade protection conversations may well get
started in the not-so-distant future.
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