Risk Center

India’s pharmaceutical industry faces scrutiny

Everstream Team

In the last six months, the World Health Organization issued two warnings against the use of cough syrup made by Indian companies linked to the deaths of more than 80 children in Gambia and Uzbekistan. The issue is one of the biggest tainted medicine scandals in years, raising concerns over poor quality control and weak oversight in one of the world’s biggest pharmaceutical manufacturing markets. Cough syrup concerns are just one of several emerging quality issues in India’s pharmaceutical industry.  

Indian pharmaceutical companies have issued voluntary recalls, with warning letters and import alerts from domestic and international authorities cracking down on quality shortfalls across the industry. As a result, manufacturing and delivery disruptions in domestic and international pharmaceutical markets are increasingly likely and could remain a threat as regulatory bodies and companies are only beginning to address recent quality concerns.  

Disruption in the world’s biggest pharmacy  

Sometimes referred to as the pharmacy of the world, the pharmaceutical sector in India supplies up to 60% of the world’s vaccine supply. Generic drugs made in India are shipped to more than 200 countries, with the U.S., Europe and Africa being the biggest importers of Indian pharmaceutical products. India’s production activities create the world’s third-highest pharmaceutical manufacturing output by volume.  

Inadequate regulatory control measures, cost-cutting, and a lack of external inspections have created quality problems within the Indian pharmaceutical business. The COVID-19 pandemic exacerbated these problems, forcing the U.S. Food and Drug Administration (FDA) to suspend most of its international inspections during the height of the pandemic. Notably, the number of FDA-inspected foreign drug manufacturing facilities fell to almost zero between April and September 2020. This likely allowed subpar products to be exported to the U.S. and other countries.  

International authorities call out Indian pharmaceutical companies  

The U.S. Food and Drug Administration, the European Medicines Agency (EMA), and the World Health Organization (WHO) are taking increasing regulatory action against Indian pharmaceutical companies. These regulatory actions, often in the form of warning letters and import bans, are primarily related to quality control, manufacturing processes, and data integrity.  

Indian companies could face manufacturing delays or may no longer be allowed to export their products to some of their key target regions in the U.S. or Europe. These and other regulatory proceedings are likely to cause supply chain disruptions in the world’s pharmaceutical markets.  

Indian government cracks down on domestic quality issues  

According to Indian government data, more than 2,500 of the almost 89,000 drug samples that Indian states and territories examined in 2021–2022 failed to meet quality criteria, and almost 380 were deemed fake or contaminated. As a result of these growing issues, authorities in India are increasingly attacking quality-related issues within India’s pharmaceutical industry.  

In March, the Drugs Controller General of India (DCGI) canceled the licenses of 18 pharmaceutical companies for manufacturing substandard quality drugs. Other companies saw their licenses suspended or were put on notice for quality issues. The Indian government announced in February 2023 that it will spend $79.6 million to bolster its drug regulation system, including setting up new drug testing facilities or upgrading existing ones where necessary. 

Everstream clients are receiving more detailed insights and recommendations about this risk. 

Contact us to learn how we can give you a complete view of the risks affecting your end-to-end supply chain and what you can do to mitigate them. 

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