Drugs & Updates

Regulatory Compliance Requirements for Pharma Companies

According to the Reserve Bank of India (RBI), the pharmaceutical sector contributes approximately 2% to India’s GDP and around 8% to its overall merchandise trade. India ranks third in the production of pharmaceuticals across the world and is the largest generic drug manufacturer in the world (RBI 2021). The success of India in manufacturing vaccines and other essentials during the ongoing pandemic does not need a retelling. It is readily evident that the pharmaceutical industry is one of the most promising sectors within the country, having registered an 18% growth in its exports during 2020-21.

In a recent in-depth study from TeamLease RegTech, they looked at the compliance ecosystem in the pharmaceutical industry. The report highlights that 97% of companies in the industry lack the required visibility and control over their compliance program. It also points out that 90% of the companies missed at least one critical compliance during the previous year, while 95% incurred fines and penalties for non-compliance.

As per Mr Rishi Agrawal, Founder & CEO, TeamLease RegTech, “Compliance management in India is complex. Pharmaceutical companies typically deal with more compliances as compared to other manufacturing sectors. In addition, the regulatory obligations evolve rapidly, leading to a more complex compliance framework. Manual processes fail to scale and lead to poor compliance. The cost of poor compliance has risen over the years.

One serious non-compliance can lead to leakage of revenue and loss of reputation. As companies scale their business, compliance cannot be an afterthought. Digitisation is the only answer for a transparent, accountable and timely compliance management program.”

The sector faces multiple challenges in the form of extensive general and industry-specific compliances that apply to different types of pharmaceutical companies. Notwithstanding the known challenges associated with the replacing process patents, driving up the export of pharmaceuticals requires many other domestic regulatory requirements to be met. Then there is the added burden of contending with overseas regulators.

Compliance officers and the senior executives in a company are often saddled with the responsibility and management of hundreds of different compliances at a time. These can be in the nature of both one-time and ongoing compliances and consume considerable bandwidth for their management.

TYPES OF PHARMACEUTICAL COMPANIES

One study identified four types of businesses within the pharmaceutical sector:

  1. marketing of generic medicines;
  2. marketing of branded generic medicines;
  3. marketing of innovator medicines;
  4. manufacture and supply of active pharmaceutical ingredients.

There are also emerging areas such as clinical trials where India is fast becoming a recognised destination. The Exim Bank of India describes the structure of the pharmaceutical companies as being divided into the following sectors:

  1. APIs
  2. Formulations
  3. CRAMS (Contract Research and Manufacturing Services)
  4. Biosimilars

Pharmaceutical companies, irrespective of their type, are always looking at a complex regulatory environment with multiple legal obligations to fulfill at any given time.

OVERVIEW OF COMPLIANCE OBLIGATIONS

Compliances in India are broadly divided into one-time and ongoing compliances. On an average, a pharmaceutical company is easily subject to 70 odd one-time registrations and approvals across four stages- Setting Up, Pre-Commissioning stage, Post-Commissioning Stage and Post-Production stage.

These approvals relate to land allotment, project-related approvals, construction approvals, approvals related to labour, safety and health, tax-related registrations, etc.Then there are the ongoing compliances which the company must adhere to at every stage of production. These include a mix of Central and state specific compliances.

Predominantly, the overarching legislation for the pharmaceutical industry is the Drugs and Cosmetics Act, 1940 and its rules and schedules such as the schedule on Good Manufacturing Practices and Requirements of Premises, Plant and Equipment for Pharmaceutical Products. Other important industry specific regulations include, Drugs and Magic Remedies (Objectionable Advertisement) Act, 1954 and Drugs and Magic Remedies (Objectionable Advertisements) Rules, 1955; Essential Commodities Act, 1955 and Drugs (Price Control) Order, 2013 etc.

TYPES OF COMPLIANCE OBLIGATIONS

Following are typically types of compliance requirements pharmaceutical companies

  1. Inspection-related Compliances
  2. Audit and Accounts
  3. Display Requirements
  4. Register and Records
  5. Employee Safety and Welfare
  6. Payments
  7. Cleanliness
  8. Examination and Testing

INDUSTRY PERSPECTIVE

In a recent survey conducted by TeamLease Regtech on compliance officers of major Pharmaceutical Compliances, here are the key findings

  1. 90% agreed to have missed at least one critical compliance during the 12 month period
  2. 95% agreed to pay fines and penalties in the 12-month period
  3. 97% believed that they do not have the required visibility and control in their organization’s compliance program
  4. 80% agreed that their Compliance needs a serious rethink
  5. 78% of Compliance officers believe that third party consultants have better liaisoning experience than they have internally
  6. 65% agreed to have poor control on their compliance documents
  7. The average cost of compliance consultants stood at approximately INR 100,000 per month; Labour contributed approximately 35% of the cost
  8. 56% believed that keeping track of regulatory updates is challenging

Source – Internet Articles, Report from TeamLease RegTech, Nishith Desai Associates, 2021

Author

Dr Shilpa Subramanian

Dr. Shilpa Subramanian is a MDS, Periodontist and currently manages Global Pharmacovigilance and Medical Affairs Operations at a Healthcare company in Mumbai. She is passionate about staying ahead of the curve in clinical and non-clinical advances in the field of pharma and healthcare.

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