The companies have little choice but to invest in bringing compliance processes up to speed, it said, adding that the cost of not doing so (warning letters/import alerts may impact both current revenues and future pipeline) will be far higher.
In general, the cost of compliance of drug makers has doubled over the past 5 years. About 30 per cent – or $4 billion worth – of India's pharma exports are to the US.
India remains a location of significant importance to the FDA as it has the largest number of FDA-approved drug- manufacturing plants with over 150 formulation facilities and is also the second-largest pharmaceutical supplier to the US market in terms of volume of generic drugs.
The enforcements by US Food and Drug Administration over Indian pharma companies, though not country specific, are mainly on account of issues such as cultural differences and attitude of employees, it said.
However, going forward, Crisil said it expects the cost of compliance to rise as drug makers adapt to a stricter regime. This will include costs of hiring personnel and consultants, apart from investments in upgrading facilities to GMP standards.
It added: "While the ratio of enforcements to manufacturing bases is lower in India compared with elsewhere, the enforcements in India have been clearly due to cultural differences, attitude of employees, inadequate interpretation/ understanding, and absence of due process and systems.
"Most of the enforcements of the last 2 years were related to differences in interpretation or understanding."