India Faces Higher QC Costs As Shasun Shows Value Of Compliance

Increased recognition of FDA scrutiny and the cost of quality failures have led to drug manufacturers in India to double spending on compliance over the past 5 years, according to credit rating agency CRISIL. And investors in India are increasingly aware of the value of such investments, Shasun Pharma seeing shares jump 16% this week after they got through an FDA inspection with only one Form 483.



Shasun has fared better than some of its neighbors in regulatory inspections; with the withdrawal of 2,900 bottles ulcer drug ranitidine stomach is manufactured by Glenmark Pharmaceuticals is a recognized problem. The company still has been caught in the furor over quality control in India, however. In 2012, some people misinterpret a warning black for one of the products customers Shasun as a warning letter to the manufacturer box, resulting in the CEO having to clarify the situation in a television interview.

This week Shasun experienced investors across twitchiness about FDA warnings when the result of a survey sent its shares down 16%. FDA inspectors visited the plant in Tamil Nadu Shasun last month, pointing out what the company calls "483s minor", but generally considered that the installation complies with GMP. Mexican authorities also inspected the plant and concluded the plant was in full compliance. With everyone alert for the next crisis-like Ranbaxy, the result was seen as positive by Shasun remarkable. Claris Lifesciences also gained 7% after the FDA approved its API plant.

The fate of Ranbaxy and other drugmakers in India has put the focus on quality control and led to greater investment by manufacturers. In a report on the trend, CRISIL concluded training expenditure, compliance departments and preventive structured governance can reduce the likelihood of falling out of favor with the FDA. And the size of the U.S. market makes such investments worthwhile, with sales to the country accounting for 30% of India's pharmaceutical exports.