On the ‘red list’ in Vietnam?

News that regulators in Vietnam cancelled the business license of Intas Pharma in early September raises fresh doubts on the integrity of India’s pharma products. A circular dated September 5, from the Drug Administration of Vietnam (DAV), a part of Vietnam’s Ministry of Health, accuses Intas of supplying low quality products manufactured at facilities which they apparently never registered with the Vietnamese authorities. Indications are that all product registrations of the company have been cancelled and a cash penalty has been imposed. This is not the first time that pharma companies from India have faced the ire of the Vietnamese health agency. In April this year, Vietnamese authorities released a ‘red list’ of pharma companies whose products did not meet their standards. The list included companies from India, other Asian countries like Korea, Bangladesh, Philippines, Pakistan, and Indonesia as well as those from developed nations like US, France, Russia, Germany and Canada.

But while most countries had just a few companies on the red list, there were 45 Indian pharma companies, including industry biggies like Strides Arcolab. The sheer number of Indian pharma companies in comparison to their peers from other countries unfortunately fed into the perception that pharma companies in India will cut any and all corners possible in the quest to make a fast buck.

Officials from India’s pharma export promotion council, Pharmexcil, insist that there is a simple explanation: Indian pharma companies outnumber exporters from other countries and have a larger presence in the Vietnamese market. Export figures do indicate that Vietnam is a desirable export destination for India Pharma Inc. As per data from the Directorate General of Commercial Intelligence and Statistics (DGCIS), pharma exports to Vietnam increased from Rs 709 crores in 2009-10 to Rs 891 crores in 2011-12 after a dip to Rs 691 crores in 2010-2011.

Pharmexcil officials hint that this is a larger conspiracy to discredit the quality of ‘Made in India’ pharma products but the September circular points to not just faulty manufacturing practices. Manufacturing products at facilities not registered with the Vietnam authorities goes beyond GMP violations and points to a willful non-compliance not by faceless staff manning manufacturing equipment but by management themselves. Vietnam is considered a low barrier country and India already faces tremendous competition in such markets, where the volume-play eats into the profit margins. Unfortunately, the reputational loss from such regulatory raps impacts not just one company. Other Indian pharma companies doing business in Vietnam too will face increased scrutiny. Many distributors are left high and dry with huge inventory of companies on the red list and dread the backlash from consumers as well. Pharmexcil and Commerce Ministry officials have engaged with Vietnamese officials and expressed willingness to discuss the way forward. Is it a simple disconnect between two different regulatory systems and processes? Will familiarising Vietnamese drug regulators with CDSCO procedures chip away at the differences? Will visits to pharma manufacturing facilities in India erase some of their doubts?

On the political front, India and Vietnam are finding new ways to collaborate, to counter China’s growing aggressiveness in the South China Sea. United against a common threat, the two countries have made considerable progress. Consider that following the successful visit of External Affairs Minister Sushma Swaraj to Hanoi in August 2014, seven agreements were signed during the four-day state visit of President Pranab Mukherjee in mid-September. (Recall that the DAV circular was dated September 5: could this have been an attempt to queer the pitch before the Indian President’s visit?)

More recently, the Vietnamese Prime Minister’s visit to India from October 27-28 saw Prime Minister Modi reaffirm that the country was an important pillar of India’s ‘Look East Policy’. Pharma exporters will be pleased that pharmaceuticals is one of the sectors identified as a priority area for cooperation. Both premiers called for close cooperation via Regional Comprehensive Economic Partnership Agreements (RCEP) with the goal of enhancing trade targets to $15 billion by 2020.

PM Modi has specifically invited Vietnamese companies to join the accelerated economic growth programme ‘Make in India’ and reap the benefits of this new initiative. The statement agreed to utilise the Customs Cooperation Agreement, another sore point with pharma exporters who allege that customs clearance takes an inordinately long time, with some pharma products not stored appropriately. Only time will tell if and when this joint statement and the ‘warm, cordial and friendly’ interactions between the two heads of state will make any difference to the ground realities.

But it is abundantly clear that pharma companies in India are yet to learn from the misdeeds of their peers. Ranbaxy could lose six months of exclusive sales of generic Nexium, which could be worth $170-$180 million, if the US FDA withholds approval of its manufacturing plants beyond end November. The writing is on the wall, but are the right people reading it?

Viveka Roychowdhury