Indian regulators plan to get stricter with those manufacturers who are yet to fully comply with current GMP standards as the country’s contract manufacturing sector is accelerating to its next big leap.

Dr. Singh, the Drug Controller General of India (DCGI), has made it clear, recently, that his office would explore all possible means to ensure that the manufacturing practices of Indian companies are on par with their global peers. The regulator would even seek necessary changes in the existing laws in the rulebook governing India’s pharmaceutical manufacturing.

For this purpose, the apex regulatory body is considering to move a proposal before the government to amend relevant sections in the Drugs and Cosmetics Act, 1940, and the Drugs and Cosmetics Rules, 1945, in the coming months.

Dr. Singh expects that such a revision in the current regulations would facilitate the ongoing efforts to bring the standards up to international levels by bridging the gap between Indian manufacturing practices and the WHO-mandated GMP.

Adoption of WHO GMP has been a contentious issue across India’s vast pharma manufacturing sector, which comprises over 8,000 players belonging, mostly, to small and midcap categories. A big chunk of manufacturers still manage to keep themselves out of the purview of the global quality standard practices even several years after India formally announced the industry’s switch to WHO GMP.

Tougher Penalties
Arbitrary enforcement of regulations, poor financial records of companies, over and above, the mindset are cited among the reasons for slow uptake of GMP culture.

While the agency can point to its limited capacities by way of trained manpower and other infrastructure as impediments to constantly monitor a large number of facilities, manufacturers keep harping on inadequacy of funds for upgrade.

Many small unit operators fear that they will have no option but shut shops if cGMP is made a compulsory requirement. According to them, WHO GMP mandates several specifications such as larger operating space and testing facilities requiring additional investments, which they cannot afford to. 

DCGI, however, stepped up efforts to beef up the inspection team early in the year. The process of training the inspectors on how to carry out periodic checks in the drug making facilities has been initiated since last year associating outside agencies like US FDA. The federal regulator has also strengthened its enforcement wing with more staff besides preparing a checklist of WHO GMP for inspectors and manufacturers.

In addition, the government has drawn up a list of stringent penalties to be imposed on the manufacturer including hefty fines, temporary ban on exports and cancellation of licenses for deviations from the checklist.

Expanding Market
Meanwhile, reports are coming up indicating rapid expansion of India’s contract manufacturing space. The overall growth of manufacturing services industry has already touched 20% mark, according to the Indian Drug Manufacturers’ Association (IDMA)—an umbrella body representing small and medium enterprises. IDMA estimates the current market value at about $5.3 billion, which comes roughly 50% of the total domestic production.

MNCs, which presently hold 20-25% of domestic market, outsource many of their products, including brand leaders to Indian CMOs. More and more of multinationals are jumping into the bandwagon through either outsourcing directly or relocating their facilities to the country taking advantage of the lower costs in production.

Several pharma majors from EU and Japan are keen to make India their production base as a measure to withstand the rising cost pressure in their home markets, revealed top officials from India’s export promotion body.

Apart from low-cost manufacturing skills and the prospects of $85 billion worth of drug that are going off patent during 2014-20 period, there are some visible trends which are expected to further speed up the CMO activity in India.

Innovators keep on pushing their highly successful, blockbusters even after patent expiry, looking at deriving the maximum potential from the brands. In order to market the brands at price levels equal to competing generics, MNCs often tend to outsource their production. India, as a well-known low-cost destination, stands to gain from this strategy.  

The speeding growth will throw open a lot of avenues for small and medium CMOs, which invariably form the majority in the India’s manufacturing space.

At present, the government is working on a proposal to assist the CMOs in the form of soft loans for example, so that they can upgrade their facilities. IDMA said such incentives could potentially add 1,000 more WHO GMP-compliant units to the CMO sector.