Active pharmaceutical ingredient (APIs) are the primary, active ingredient(s) of a final pharmaceutical product, produced in the first stage of pharmaceutical production and usually in bulk quantities. The global management consulting major Mckinsey and Company Inc. has also predicted recently that the Indian pharmaceutical market is currently valued at US$ 20 billion and expected to touch US$ 40 billion by 2015, growing at compounded annual growth rate of nearly 14 per cent in the next few years.
India is one of the leading players in the world with more than 500 different APIs. (Source: Ernst & Young, 2009), growing at 19.3 per cent with Indian bulk drug exports increasing from $ 1.56 billion to $ 4.8 billion, cheaper APIs and formulations being India’s forte. Further India's share of global contract manufacturing is expected to grow at a CAGR of 25 per cent to be worth $10 billion by 2015.
Drugs are in the concurrent list of Constitution of India. It is, however, important that the drugs so available are not only of standard quality but are safe, potent and efficacious also. Regulatory control over the quality of drugs in the county is exercised by both the central and state governments through the provisions of the Drugs & Cosmetics Act, 1940 and the Drugs & Cosmetics Rules, 1945 made there under.
Policy and regulatory framework
The Central Drugs Standards Control Organization (CDSCO) with the Drugs Controller General (India (DCGI)] as its head is the Central regulatory body for enforcing the quality standards of drugs, cosmetics and medical devices in the Central Government. The manufacture and sale of drugs is looked after by the State Drugs Control Authorities appointed by the State Governments while imports, market authorization and new drugs are the responsibility of the Central Government.
Indian manufacturers of APIs have to adhere to Good Manufacturing Practice (GMP) guidelines in order to enter highly regulated markets. The Drugs and Cosmetics Act 1940 and Rules 1945, has laid down that `standards of quality of drugs shall be as given in the second schedule to the Act. Any drug including API should conform the specification of the prescribed pharmacopoeias or those claimed on the label. In addition patent and proprietary medicines are required to comply with the requirements of Schedule V of the rules.
Schedule M pertaining to Good Manufacturing Practices involving premises and plants makes it mandatory, at par with the international standards, for the manufacturers of drugs to comply with the requirements for the Schedule for quality control of the drugs manufactured by them. Good Manufacturing Practices (GMP) constitutes an international set of guidelines for the manufacture of drugs and medical devices in order to ensure the production of quality products. These protocols are largely concerned with parameters such as drug quality, safety, efficacy and potency. Further, India is one of the signatories to WHO GMP Protocols. This certification possesses two-year validity and may be granted both by CDSCO and state regulatory authorities after a thorough inspection of the manufacturing premises.
Schedule M protocols have been revised to harmonize it along the lines of World Health Organization (WHO) and US-FDA protocols. These revised protocols include detailed specifications on infrastructure and premises, environmental safety and health measures, production and operation controls, quality control and assurance and stability and validation studies. The revised Schedule ‘M’ specified requirements for GMP that have become mandatory for pharmaceutical units in India since July 1, 2005 and classifies the various statutory requirements mandatory for drugs, medical devices and other categories of products as per the current GMP (cGMP).
To import API, the applicant has to submit all relevant information and documents listed in the Common Technical Document (CTD) and comply with further requirements for import of API (Rule 122A of the Drugs and Cosmetics Rule 1945). To manufacture the API also the applicant has to submit all relevant information and documents listed in the CTD and comply with further requirements for manufacture of API (Rule 122B) and for both the cases the applicant requires to file an application in Form 44 along with prescribed fee with all relevant documents.
Approval of manufacture of new drug and its formulation will be considered after approval of manufacture of the API. In case of a new chemical entity, the approval of only API cannot be considered unless safety and efficacy of the finished formulation of the drug is evaluated and approved by DCGI.
Further, to conform to international standards, the government of India has brought into effect stricter norms for obtaining No Objection Certificates (NOCs) for pharmaceutical exporters. CDSCO has issued circular with effect from January 1, 2010, announcing a set of new rules for exporters. Exporters of pharmaceutical products will need to submit documents including a shipping bill along with custom report to obtain NOC from the Assistant Drugs Controller for export of drugs and cosmetics. Exporters need also submit a sample of the drugs from the consignment sealed or signed by the customs officer.
The pharmaceutical manufacturer must have evidence of appropriate audit being performed on all its API manufacturers in respect of manufacturing, packaging, repackaging, mixing, labelling, re-labelling, and supplementary labelling that may be required for future inspections at the premises of pharmaceutical manufacturers. India ranks next only to USA with regard to approval of drug master files (DMFs) and acquired scores of approvals by UK MHRA and various other regulatory agencies.
Leading API manufacturers
India has experienced tremendous growth in terms of API manufacturing. Indian pharmaceutical companies have invested significantly in capacity, and increasingly gained recognition by raising their standards and quality, as well as general compliance which have become very much in tune with the international needs.
The API market is very competitive and has many producers. Almost all leading pharmaceutical producers in India tend to be oriented towards the international API market. For example, Dr. Reddy’s, an Indian firm that manufactures both APIs and final formulations, Matrix Laboratories, (an Indian firm that is currently becoming a wholly-owned subsidiary of Mylan Pharmaceuticals, a US firm) that manufactures both APIs and final formulations for HIV drugs provides another example. Matrix also sells some of the HIV APIs it manufactures to Indian final formulation competitors. Prior to acquisition Matrix had acquired API manufacturing operations across India (Concord Biotech, Astrix Laboratories) and China (MChem) Laboratories. Reliance Life Science is focused on developing Active Pharmaceutical Ingredients (API) and formulations for domestic and global markets in the categories of oncology products, steroids, hormones and peptides.
A large number of Indian firms are increasingly seeking at least WHO GMP approval in order India has the distinction of having the largest number of US-FDA approved manufacturing units for example-Natco, Hetero, Dr. Reddy’s, Cipla Nicholas Piramal, Cadila Healthcare, Wockhardt , Lupin, Orchid Chemicals and Pharmaceuticals etc. to name a few that achieved status in the global stage; many of these firms' international sales are higher than their domestic turnover. Further, merger and acquisition of foreign cos offers a competitive advantage. For example, in 2005 Dr Reddy's acquisition of Roche's API business for $59.6 million and Ranbaxy's acquisition of a 40 per cent stake in Japan's Nihon Pharmaceutical Industry.
Although the API covers biologics, companies were till recently reluctant to outsource patented pharmaceutical/biologic APIs. Companies from regulated markets have been reluctant to outsource API manufacturing of patented drugs to India. However, outsourcing API manufacturing of patented products has gradually increased with companies such as Solvay, AstraZeneca, GSK, Eli Lily, Pfizer etc signing API contract manufacturing agreements with Indian companies. Most of these plants have multiple approvals from regulatory authorities in Canada, Australia, Germany and South Africa.
Indian API manufacturers maintain high standards in purity, stability and international safety in production and supply of APIs in international market and pass through stringent assessment by regulatory authorities in those importing countries. The large numbers of approved sites aptly demonstrate the ability of Indian companies adopted global standards for growth and sustainability to deliver quality products worldwide with lower manufacturing costs than the US and Europe. As manufacturers of APIs desire to take advantage of export opportunities, they should align their manufacturing processes according to the respective national regulations and the Q7A Good Manufacturing Practice Guidance for Active Pharmaceutical Ingredients requirements pertaining to their quality management system and documentation structure.
The author is Partner,Corporate Law Group, New Delhi.