Pharmalot: The FDA import alert for Aurobindo seemed to underscore concerns about overseas suppliers, particularly those from India. How big a problem does this suggest? Mynhier: Well, let’s take the bigger picture for a moment. You don’t have to look far in our own backyard to see product or marketing issues. So I don’t think this is necessarily sudden cause for concern with a specific country such as India. It’s not just India that has had manufacturing problems, which have been uncovered or discussed. But India is under a spotlight. India is supplying a specific number of generics to the world right now, not just the US. And the FDA is clearly setting its sights on on Indian suppliers. So yes, India makes a lot of sense (as a target).
Pharmalot: Why is that? And which kinds of problems are causing a focus on India? Mynhier: There are certain areas where Indian manufacturers have not moved along the maturation curve, such as management systems and the ability to investigate when things go wrong, although I think that’s a global issue, too. But there’s also the inability of the executive management to understand what’s expected of them and then implement either consequences or incentives for employees.
Pharmalot: How do you mean? Mynhier: We’re just not seeing consequences or incentives implemented nearly enough. Specific to India, there are two things we’ve noticed that feel qualitatively different. One is the extraordinary amount of deference paid by employees to management. In the more remote regions, there aren’t a lot of companies offering jobs. So it becomes a challenge when there is a problem, because employees may not want to speak up. And so a problem ends up taking much longer to surface and fix. It’s hard to get personnel to tell us what the issue is. And there are language issues. Despite the fact that many speak English, some speak Hindi. But the English (contained in production specifications) can have a very technical quality, a lot of technical terms, that make it more difficult.
Pharmalot: So what about the strategy of buying or contracting with these sorts of suppliers? Is there reason to rethink that now? And do the decisions reflect naivete, inexperience, a rush to stake out territory or all of the above? Mynhier: Everybody is going to emerging markets and picking up suppliers, acquiring companies, buying assets. I would argue that this is buyer beware. The burden of diligence is on the buyer. And sometimes, I get surprised at the level of diligence that’s performed.
It seems there could and should be a better understanding of areas of vulnerability, but… The issues should be addressed through pricing or not to go with certain companies until the issues can be addressed. I am surprised at how many (companies) are frustrated at having import alerts or warning letters issues immediately or shortly after an acquisition. There’s a lot of eagerness and it’s really a land grab. So there’s a real calculus about how much diligence can be performed and how much is tolerated by the company to be acquired when there are numerous people out there and it could become a bidding war. So the acquirers have to make a judgment call. Arguably, there has to become speed as people move through opportunities quickly. So, I don’t see them slowing down. The emerging markets are too significant. The level of diligence need to avoid trouble spot is the differentiator. The ability to choose wisely and find the right portfolio will separate the winners and losers.
Pharmalot: How big a risk is this for the big drugmakers? Mynhier: It’s an important risk for major pharmaceutical companies. The branded generic is supposed to extend value and so the representation of the brand that is made by other sources can be a significant risk. There are two aspects: where something is sourced and where something is sold. Whether it’s India or whether the industry goes around the globe following low-cost labor. That will create risk or opportunity depending on the stability and effectiveness of regulators. But it’s not consistent from place to place, from India to China to Africa, until we get to some harmonization. So global manufacturers like Pfizer have to step back and ask what they’re slapping their name on.
Pharmalot: All of this, ultimately, makes it harder for the FDA, yes? Mynhier: The FDA is doing a good job with a difficult task. The agency has a dwindling set of resources. The question of how it implements its mission rests, in part, on how we educate a global community on standards and how they will be met. They have put quite a few organizations on notice. But the acquiring company has to slow down to evaluate the enterprise and the risk, and the Indian manufacturer has to slow down to make sure they interpret (rules and standards) correctly and implement solutions. This is a time-consuming event - retraining people, changing the way managers think and operate. And regulators need time to see these things work.
Pharmalot: What does this mean for consumers? Mynhier: From Pfizer’s standpoint, there are varying expectations from the customer base. The consumers in the US are cautious. They have been exposed to name brands and the best medical care in the world. In general, generics are more widely accepted here. The usage rates are high. But they may become cautious about moving to generics that are now made elsewhere in the world. I haven’t seen that level of discernment (from consumers) in other places, such as areas of Africa or India.
* PRTM would not disclose the names of specific clients