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Last Updated : May 20, 2019 08:00 PM IST | Source:

Rising OAIs bring spotlight back on regulatory compliance at Indian pharma companies

USFDA classifies its inspection as OAI for plants found in an unacceptable state of compliance with regard to current good manufacturing practice (CGMP).

Viswanath Pilla @viswanath_pilla
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Aurobindo Pharma on May 17 announced that it has received letters from the USFDA classifying the inspections concluded at three of its facilities as Official Action Indicated (OAI).

The three facilities Unit I (Medak, Telangana), Unit XI (Pydibeemavaram, Andhra Pradesh), and intermediates facility of Unit IX (Medak, Telangana) is critical for Aurobindo Pharma’s backward integration of its generic business in the US.

Aurobindo over the years had built impressive backward integration capabilities, taking advantage of low production costs in India to play aggressively in a commoditised generics market.


The USFDA letter came as a setback to the company, which was otherwise a darling on the stock market with returns of little over 50 percent in the past year.

Aurobindo said it has responded to USFDA’s queries and updated them on corrective actions. But the market is in no mood to listen, as the stocks plummeted 8.4 percent in the last two trading days.

Even on May 20, when the markets saw a rally after exit polls predicted an NDA government led by Prime Minister Narendra Modi to retain power post the 2019 general elections, Aurobindo was ignored as its shares fell by 0.90 percent to close at Rs 664.20 on the BSE.

Besides Aurobindo, other drug makers whose inspection sites were classified as OAI include Lupin’s three facilities in Somerset, US, Mandideep, and Pithampur Unit-2 plants in Madhya Pradesh; Strides’ Puducherry facility; Alkem Laboratories’ St Louis site in the US; Indoco’s Goa unit; and Jubilant Life’s Nanjangud unit in Mysore, Karnataka.

OAI impact

USFDA classifies its inspection as OAI for plants found in an unacceptable state of compliance with regard to current goods manufacturing practices (CGMP). The agency will intimate the company about the classification within 90 days of the inspection.

While an OAI classification doesn’t impact existing supplies and revenues from operations of the facilities, it blocks new product approvals filed from the site. In addition, it may even trigger a warning letter or import ban, if companies fail to satisfactorily address the concerns raised by the USFDA. The OAI also increases the spend on remediation.

Regulatory compliance is an ongoing process, Indian drug makers last year have shown considerable improvement in inspection outcomes and have reached in line with the global trend.

Moneycontrol earlier reported that in 2018, India had 174 inspections by USFDA or 14 percent of the total inspection conducted by the US drug regulator around the globe.

According to USFDA data, out of 174 inspections in 2018 only 4 percent inspections have been classified as OAI, in contrast to 15 percent in 2017. For all USFDA inspections, the OAI stood at 4.31 percent.

2019, a different story 

This year has been a different picture, so far Moneycontrol was able to spot a dozen OAIs, within the first half of 2019, in contrast to seven in 2018.

The barrage of OAI classifications for the facilities of Indian drug makers by USFDA suggests that there is still something lacking.

Issues related to data integrity, investigations and root cause assessment have seen a reduction in 2018. But failure to establish laboratory controls and failure to ensure those test procedures are scientifically sound are becoming a cause of concern.

"This is part of US regulator’s rising expectation. The agency wants Indian drug makers to become proactive from being reactionary," said a consultant, who didn't want to be named, as he is working with some of the companies mentioned in the story.

"They (USFDA) want consistent compliance, reliable and robust systems tospot a manufacturing issue even before it occurs, so the message says don't let the hat drop in terms of quality," the above consultant said.

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First Published on May 20, 2019 07:09 pm
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