The global market for active pharmaceutical ingredients (APIs) in 2013 was estimated at US$ 119.7 billion and is projected to grow at a CAGR of 6.5% to a value of US$ 185.9 billion by 2020 The Asian contribution to the API industry is shared between India 33%, China 61%, others 6%.
In the recent past, drastic manufacturing cuts implemented by the pharma giants to in-house API production, attributed by poor cost viability and increased productivity issues coupled with other key parameters such as high end R&D costs and pricing issues on finished formulations have resulted in a thrust to outsource API production. Moreover, the amplified growth in API segments projected is based on a substantial global upsurge in the demand for generic prescription drugs.
The highly profitable biological API segment is experiencing positive spikes in response to a concerted interest evinced by the Big Pharma. Oncology API comprising of high potency active pharmaceutical ingredients (HPAPIs) is an area of avid interest and is expected to be a major growth driver of API market worldwide.
Furthermore, the API scenario is anticipated to show further traction in response to the evolving regulations in the markets of North America and Europe. Consequently, the gear for growth opportunity in API manufacturing segment is shifted from local markets to the second in-line emerging markets of India and China. Given their overall dominance in intermediates and API manufacturing, Chinese players can pose a serious competitive threat to their Indian counterparts, much beyond the APIs for essential drugs.
Evolving regulatory expectations
Global : GMP inspections :
The majority of medicinal products manufactured in Europe and the North America contain APIs and excipients manufactured in Asia.
In response to this external input the regulators of North America, Europe and Japan have adopted the "International Conference on Harmonisation (ICH) Q7 Good Manufacturing Practice Guidance for Active Pharmaceutical Ingredients," based on endemic regulations that substantiate and even extend the WHO requirements in several areas of compliance.
European manufacturing authorization holders are obliged to ensure compliance to Good Manufacturing Practice (GMP) of their medicinal products as per Article 46f of "Directive 2001/83/EC", which have since been made into legislation within the European member states.
Within the European Union, the ICH Q7 regulations have been established as "EU GMP Guideline Part II," with (nearly) identical terminology. Other countries such as Canada, Australia and Singapore have also adopted the ICH regulations - the latter via the "Pharmaceutical Inspection Co-operation Scheme" (PIC/S).
As is evident GMP regulations vary worldwide. The World Health Organization (WHO) has created a globally consistent basis for quality standards with the compendium "Quality Assurance of Pharmaceuticals." Chapter two describes the GMP requirements for "APIs (bulk drug substances)".
Hence holders of GMP certificates provided by competent national authorities, be it the Chinese State Food and Drug Administration (SFDA) or CDSCO in India continue to attract API audits.
Therefore, all Indian API manufacturers exporting to regulated markets should be prepared to face GMP audits of their quality systems and manufacturing processes. These audits are conducted by qualified individuals or through contracted third-party auditors.
India: Schedule M
Indian regulators have authored Indian GMP requirements in Schedule M of the "Drugs and Cosmetics Rules". Unlike the ICH Q7 which deals exclusively with APIs, Indian GMP regulations do not distinguish between GMP for medicinal products and GMP for APIs, wherein Part 1-F covers API manufacturing.
Several amendments to Schedule M have since been incorporated whilst others continue to be in draft mode. The regulatory agencies are seeking to promote the approach to harmonize Schedule M with the ICH/PICS in order to offer a level playing field to the Indian manufacturer. Simultaneously with the review and adaptation of Schedule M it is suggested that the norms for GMP inspection conducted by the Indian inspection agency be reviewed and harmonized with global norms to give due impetus to the Indian manufacturer on the global stage.
Indian pharmaceutical companies exporting to the ICH region are required to comply with ICH Q7 Guideline, along with the national regulations. Interpretive risks on guidelines can be avoided by employing experienced auditors who are familiar with the regulatory guidelines in India and global markets.
Import/export requirements
Around 14 to 15% alone of the Indian pharma companies follow global standards and are in a position to export to the regulated markets (US, EU etc). India continues to depend heavily on intermediates and API from China for a large number of essential drugs viz: paracetamol, metformin, ranitidine, amoxicillin, ciprofloxacin, cefixime, acetyl salicylic acid, ascorbic acid, ofloxacin, ibuprofen, metronidazole and ampicillin and such dependence is detrimental in the long run. Efforts by all stakeholders are being exercised to make India self-sufficient in bulk drugs (APIs) that meet global quality standards.
Critical GMP compliance
Some of the common GMP non-compliance observed during API audits are failure to implement an effective system of managing quality and failure to transfer all quality or regulatory information received from the API manufacturer to the formulation manufacturer. There is also the failure of the quality unit to review batch production records prior to distribution of an API batch. Further, there is a set-up to o document manufacturing operations at the time they are performed. In addition, there is the inability to adequately maintain equipment and protect computerized data from unauthorized access or changes. There are instances where companies have failed to ensure that test procedures are scientifically sound and appropriate to ensure that key starting materials and intermediates conform to established standards.
Observations are also made where companies failed to follow and document quality-related activities at the time they are performed. Firms are also found to frequently perform ‘unofficial testing’. There is also failure to perform laboratory testing of APIs to ensure conformance to specifications and to accurately report results on Certificates of Analysis.
Besides, there is a failure maintain complete data derived from all laboratory tests. Also there is failure to ensure equipment is cleaned in a reproducible and effective manner. Moreover, there is failure to ensure that APIs are produced according to pre-approved instructions.
Deviations from GMP are preventable. Understanding the intent of API GMP, applying procedures and systems designed to address the intent, and strong commitments from the management of firms and their quality personnel will go a long way to assuring API GMP compliance.
2015 Year of API
Technical & commercial initiatives
The Ministry of Chemicals and Fertilizers has christened 2015 as the Year of API and the Government of India (GoI) is taking significant steps to foster this initiative. A task force known as the Katoch Committee) has been constituted by the department of pharmaceuticals (DoP) to promote bulk drug manufacturer. Six large API intermediate clusters in 5-6 states are being established to revive API manufacturing in the country.
The main recommendations made by the Katoch Committee are to make available suitable land for API manufacture with basic infrastructure to include but not limited to – water, electricity, ETPs/STPs, steam, testing facility, etc.
To encourage foreign investment, by formulating fast track clearances, offering funding for green field/brown field projects with appropriate due diligence with additional support and encouraged to brownfield technologies.
Financial assistance will be provided to States for acquiring land to establish special zones.
Adequate facility for power & transportation; modelled on the lines of states of Gujarat, Andhra Pradesh, Tamil Nadu and Odisha exemption from the duties is envisaged.
It is also proposed to extend soft loan option at a rate of 7.5% interest with a repayment period of 10 years. Income tax benefits to be extended for a period of 10 years which will be product wise.
It is suggested as well that Agency inspection should be carried effectively, need to set up advance testing laboratory in all ports and ensure the promotion of a stronger and robust ‘industry – academia’ relationship.
There is an urgent need to strengthen the small and mid-sized API manufacturing sector in India. Besides providing financial assistance, the sector requires up gradation with state of the art pharma technology and training support to meet global standards.
(The authors are working with PharmaLeaf India Private Limited)