On 13 May, India's pharma major Ranbaxy Laboratories agreed to pay $500 million to settle the US government charges of fraud at its Indian factories. Two weeks later, Jaslok Hospital, a renowned hospital in South Mumbai, has stopped the sale of Ranbaxy drugs and advised its doctors to not prescribe medicines manufactured by the pharma major, while others are reviewing the decision.
If drugs manufactured from Ranbaxy is found to be adulterated by the US, does this mean that the quality assurance as mandated by the Indian regulatory system is flouted too?
Jaslok's management wants to be on the cautious side, reported the Times of India, after the US FDA found the company had not followed adequate rules in manufacturing drugs meant for the American market, which resulted in a ban of around 30 Ranbaxy drugs.
A senior official of Apollo Hospitals told Business Standard it was reviewing the situation and would take action, if necessary but the hospital hasn't issued an advisory so far.
Even the Indian Medical Association that represents medical practitioners has asked the Drug Controller General of India (DCGI), to investigate the quality of drugs manufactured and sold by Ranbaxy.
In the last week, Ranbaxy shares have taken a beating, with its share price surrendering 14% from Rs 460 from the beginning of this month to Rs 395.55.
Former Ranbaxy employee Dinesh Thakur blew the whistle on Ranbaxy and alleged that company executives knowingly fabricated test data on generics destined not only for the US but several other markets.
The US business magazine Fortune has published 'Dirty Medicine', an extremely detailed report on what was wrong at Ranbaxy and what the US FDA's case is based on. According to the article, Ranbaxy scientists were routinely directed to "substitute cheaper, lower-quality ingredients in place of better ingredients, to manipulate test parameters to accommodate higher impurities, and even to substitute brand-name drugs in lieu of their own generics in bio-equivalence tests to produce better results."
Thakur uncovered evidence of falsified and invented data intended to deceive FDA regulators and gain FDA approval for drugs that were often contaminated, substandard, or even counterfeited, and he reported his findings to his superior RajinderKumar, who in turn presented the evidence to senior executives. Both Kumar and Thakur repeatedly urged Ranbaxy to address and correct the problems but were met with silence, resistance, and worse.
Moreover, Ranbaxy lied to the US FDA and other regulators frequently, and indulged in back-dating and forging data, the article said, quoting Thakur.
Ranbaxy's desire to quickly launch products in the US market and bag six month exclusive marketing opportunities, which promised windfall gains, led to most of the data fudging and other malpractices in the company. According to a report in the Economic Times, Ranbaxy's strategy was to falsify data in its filing, but then get the quality of the product right between the periods of filing the application and launching the drug in the market.
The problems with Ranbaxy stretch back at least to 2004, and but it was only fined a fortnight ago. What's worse is that India's regulators failed to address this problem early on. It is only now that the health ministry ordered the drug regulator to initiate a probe into the veracity of Ranbaxy's documents.
But the icing on the cake is this: Former owners of Ranbaxy, brothers Malvinder and Shivinder Singh, have walked free after making a killing from their Ranbaxy sale to Daiichi Sankyo in 2008.
"On June 11, 2008, Singh stunned the Indian business world by announcing that he and his brother were selling their 34% stake in Ranbaxy to the Japanese drugmaker Daiichi Sankyo for $2 billion. Overall, Daiichi Sankyo shelled out $4.6 billion to take control of the company. Singh agreed to stay on for five years as CEO. Some in the Indian press portrayed the sale to a foreign company as a betrayal of national entrepreneurial pride. But it seemed Singh was cashing out at a propitious moment," the Fortune article read.
It is clear that Ranbaxy endangered the lives of millions through its callous practices but its licence is still not revoked nor are its drugs blacklisted pending investigation. The company's actions are a breach of trust that patients place in it when they buy its drugs.
It's also a wake-up call for India pharma as Indian generics account for 30 percent share of the US market. As scrutiny of Indian factories is upped, more violations are bound to be detected. Shorty after the Ranbaxy saga, another Indian pharma major Wockkhardt's factory in Aurangabad was issued an import alert. More such violations, will only hit profits and reputation of Indian firms.
As Kiran Mazumdar Shaw, chairman and managing director of Biocon, rightly says, "A loss of reputation means loss of market share - something we can ill afford in this hyper-competitive landscape."
Updated Date: Dec 20, 2014 21:11 PM