India Pharma Inc in M&A mode once again

Glenmark Pharma’s 75 per cent stake sale in its API arm to Nirma, and the possibility of the biggest shake up in pharma rankings, as Cipla’s promoters mull a sell out, kept the pharma sector in simmer mode all through September. 

Both deals are symptomatic of India Pharma Inc today. The exit of Cipla’s Hamied family from the driver’s seat will mark the end of an era. In my brief stint as editor of Ciplog, Cipla’s house journal, in the early 1990s, and continuing as a journalist covering the pharma beat, I watched from the sidelines as Dr Y K Hamied championed low cost generics on the ‘patients over patents’ premise. 

India’s pharma sector is clearly once again in consolidation mode. But while the big names are in the news, we could also see a similar consolidation among pharma MSMEs which might not hit the headlines. Besides the usual reasons (lack of interest/acumen from the GenNext of these pharma promoters, etc), proposed revisions to India’s pharma Good Manufacturing Practices (GMPs) in Schedule M could make or break MSME pharma units. The tightening noose of regulatory scrutiny could turn out to be a major driver for sellouts in the MSME sector over the next few months. While laggards managed to slip under the radar of global scrutiny, India’s Central Drugs Standard Control Organisation (CDSCO) now seems to be in crackdown mode.

In a follow up to Union Health Minister Mansukh Mandaviya’s statement in early August that pharma companies with an annual turnover of over Rs 250 crore will have to mandatorily adopt GMP standards within six months, and those with a turnover of less than Rs 250 crore would get six months more, the CDSCO has partnered with industry associations like Indian Drug Manufacturers’ Association (IDMA), as well as drug inspectors via the All India Drugs Control Officers’ Confederation (AIDCOC) to conduct online and offline awareness workshops, walking the participants through the proposed changes that will be part of the updated Schedule M. These workshops are set to continue over the next few months. 

The comparison between the existing Schedule M and the draft upgraded version (as outlined in the presentation given by Dr Eswara Reddy, JDCI, CDSCO at one of these webinars) would require considerable expenditure and time. For instance, sanitation has been expanded from covering only workers and manufacturing premises to cover ‘personnel, premises, equipment/apparatus, production materials and containers.’ Similarly, validations would extend beyond just the manufacturing processes, testing and cleaning to now include ‘premises, utilities and equipment’.

Another concern for smaller players is that the updated Schedule M will bring in mandatory annual audits of their approved suppliers, including raw material and packaging material suppliers. Currently, the frequency of such audits are left up to the manufacturer and are conducted on specific occasions, for instance, after product recalls or inspections by licensing authorities. This update ensures safer medicines, as it would prevent the use of suppliers who do not have the license for pharma-grade materials. This is clearly linked to instances of Made in India cough syrups found to contain high levels of the toxic diethylene glycol (DEG). However, annual audits would add to the documentation and administrative cost of doing business, especially painful for the MSME sector.

Product recalls would now need to be reported to the licensing authority, specifying a comprehensive system for prompt and effective recalls. Beyond reporting serious adverse drug reactions to the licensing authority, the draft updated Schedule M requires companies to have a pharmacovigilance system in place, and faulty manufacture, product deterioration and serious quality problems will need to be reported to the licensing authority.

Will such changes be too exhaustive to implement? Will CDSCO give industry more time for implementation? These are legitimate concerns. Let’s hope that these workshops are taken more seriously this time around and manufacturers implement the updated Schedule M in the right spirit. Given that pharma companies have previously complained that there was a mismatch between the states’ and center’s reading of these rules, with some state regulators being more benign than others, one hopes that these workshops will also result in more consistency in the interpretation and implementation of the rules across all jurisdictions.