Indian pharmaceutical industry received a second shock last week when the US government filed a suit against Ranbaxy Labs and its US based consultant, Parexel Consulting, for allegedly concealing and forging critical drug data to get favourable verdict on an investigation into the sales of substandard drugs in the US. The first shock was when the Ranbaxy promoters unexpectedly sold of their controlling stake of 34.8 per cent to Japanese drug company, Daiichi Sankyo, early last month. That did rattle Indian pharmaceutical industry which always looked forward to the company as its hope and India's leader in the global market. The second shock is more debilitating to the country's pharmaceutical sector as the US action amounted to questioning the manufacturing practices of India's largest pharmaceutical company. The suite, filed in the US District Court of Maryland, has sought direction to Ranbaxy and Parexel to submit all relevant documents for verification. India has been boasting for some time that it has the largest number of US FDA approved drug manufacturing facilities outside the US and the country is the single largest source of quality generics to the US healthcare system. And Ranbaxy itself has several of its manufacturing plants in India and abroad approved by the US FDA. What the US government has leveled against the company, of course, are charges to be proved. But, that can be only a consolation to the company management at this moment as filing of such charges cannot be normally without some substantial evidence.
Ranbaxy management claimed the other day that some multinational is behind these charges and investigations against the company. It is possible that some of the US based multinationals may not have been comfortable with domination of the US pharmaceutical market by Ranbaxy and other Indian generic makers. India's success story in generics has been hitting the branded companies in the US for some years and several court battles are already going on with Indian companies over patent rights. With the increasing support for cheaper drugs from the NGOs and patient groups in the US, the generics companies have turned into a major threat to the very existence of long established branded companies. That apart, the issue here is whether substandard drugs were manufactured and exported by Ranbaxy from its plants in India because of poor manufacturing practices. If charges against Ranbaxy are proved, the company is likely to be subjected to severe penalties and damages. That may also cast a shadow over the country's drug manufacturing practices triggering a series of re-inspection of all US FDA approved facilities in the country. Now with US Congressional Committee finding fault with US FDA's regulatory supervision of marketing of pharmaceuticals in that country, the agency is bound to act tough on Indian pharmaceutical exporters now onwards. What is evident from the whole episode is that lapses do occur on the part of pharmaceutical companies in maintaining manufacturing standards once an approval is obtained for its facility from an international regulatory agency. Regulatory agencies also fail to conduct periodic audit of these facilities once an approval is granted.