Consolidation on a massive scale amongst the elite of the U.S. pharmaceutical industry raises questions about how to remain competitive, and profound changes to the marketplace can be seen on all fronts. On the regulatory side, the FDA’s transformation from an overhead-intensive approach to quality to one based on scientific rigor is well underway. What this will ultimately mean to brand and generic pharma is still unknown, but there can be no doubt that the levels of scientific rigor and document traceability will need to be higher than ever before.

The latest weapon in the competitive arsenal is to leverage low cost APIs and development and manufacturing capability in emerging markets, the so-called BRIC nations of Brazil, Russia, India, and China. On closer view, the real challenge to fully reap the benefits of these low-cost resources lies in minimizing risk, rather than blindly pursuing what looks like easy money. Within the context of regulatory exposure, that entails converting legislation into a measurable action plan. The recent spate of high-profile enforcement actions in the U.S. serves as a bitter reminder of how difficult it is to translate theory into practice.

The U.S. Food and Drug Administration (US FDA) is responsible for enforcing one of the world’s most stringent sets of quality requirements. And the newer markets are struggling to correctly interpret regulatory guidance documents and manage overall compliance risk exposure.

India has the largest number of accredited facilities outside the U.S., with nearly 100 pharmaceutical manufacturing facilities approved by the US FDA to source pharmaceuticals. Even before any approval can be given for a pharmaceutical product, these facilities are monitored periodically to ensure that the good manufacturing practice (GMP) standards set by the federal regulator are followed. If there are excursions from these standards the agency moves toward immediate action. Over the years, Show Cause notices have been sent out to several Indian manufacturing facilities, including Ranbaxy, Wockhardt, Sun, Lupin, and Cipla, after manufacturing deviations were found during inspection of their overseas facilities. Despite the benefit of exposure and experience with the US FDA regulations, the risk of non-compliance is ever present.

Ranbaxy, now a subsidiary of Daiichi-Sankyo of Japan, is one of India’s leading drug exporters to the U.S. Most recently, the US FDA went so far as to suspend the certification of Ranbaxy’s formulations manufacturing facility, Paonta Sahib, for not following its own standard operating procedures (SOP). What followed was a ban on importing products manufactured there, inflicting huge losses to Ranbaxy.