Decoding compliance management in pharma sector

India is a veritable pharmacy to the world. With a market size of nearly $42 billion, its pharma sector made exports worth over $24 billion and recorded a 200 per cent Year-on-Year (YoY) growth in FDI inflows. On the back of 3,000 companies, 10,500 manufacturing facilities and a skilled resource pool, the Indian pharma industry has made tremendous strides on the global front. It produces three out of five vaccines worldwide, captures 20 per cent of the global supply of generic drugs, and ranks third in the world by production volume.

While the sector has seen sustained growth, regulatory hurdles have blunted the pace of progress. To illustrate, a mid-sized pharma company with a factory in just one state faces 998 compliances involving at least 70 one-time registrations and approvals. These compliances run into several thousands as the company expands its operational capacity and geographical footprint. The sheer number of regulatory updates makes the compliance universe all the more fluid and unpredictable. Over 3,500 updates are published yearly on more than 2,000 government websites, with no comprehensive mechanism to track them on a real-time basis.

The categories of compliance are also diverse, spanning across finance and taxation, secretarial, commercial, labour and environment, safety and health. These are accompanied by a plethora of industry-specific compliances such as obtaining licences under the Drugs and Cosmetics Act, 1940, submitting quarterly returns as per the Narcotic Drugs and Psychotropic Substances Act, 1940 and instituting pricing mechanisms in accordance with the Drugs Price Control Order, 2013. The ICMR Code – Ethical Guidelines for Biomedical Research on Human Participants also prescribes a host of compliances including registering with the National Apex Committee for Stem Cell Research, providing compensation for subjects of medical trials and giving notifications to the Ethics Committees in case of termination or suspension of trials.

In India, the pharma industry is highly regulated by the Drugs Controller General of India (DCGI) under the Central Drugs Standard Control Organization (CDSCO). However, as companies look to fulfill their export ambitions, they are confronted by extensive regulatory norms imposed by other countries. For instance, the US has enacted the Health Insurance Portability and Accountability Act (HIPAA), which sets out numerous compliances for healthcare entities to protect sensitive patient data. Drug controllers across the world, such as the US Food and Drug Administration (FDA), the European Medicines Agency (EMA), the Federal Drug Control Service of Russia and the South African Medicines Control Council, have their own procedures, documentation and controls.

At the same time, the business environment for pharma companies faces regulatory hostility in the form of imprisonment clauses. Of the 998 compliances dealt with by a pharma MSME, close to 50 per cent prescribe jail terms for violations. A sizeable portion of them criminalises procedural violations and technical lapses rather than serious offences involving willful harm. Three out of every five imprisonment clauses prescribe jail terms exceeding one year, highlighting the severe implications for noncompliance in the sector. The cost of poor compliance is simply too high, and, thus, effective compliance management has become a business imperative.

TeamLease RegTech recently launched a first-of-itskind report “Simplifying Compliance Management for Pharmaceutical Companies” on the state of regulatory compliance in the pharma sector. It details the numerous challenges encountered by the industry and proposes actionable recommendations for reducing the compliance obligations of pharma companies. It also supplements its findings with crucial industry insights, providing a unique insider perspective into the reforms needed for enabling ease of doing business in this pivotal sector.