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Flies Found by FDA Threaten Indian Town Built on Generics

By Ketaki Gokhale and Adi Narayan
March 07, 2014 1:47 PM EST 59 Comments
A man walks though a field of mustard flowers near the Ranbaxy Laboratories Ltd. facility in Toansa, on the outskirts of Chandigarh, Punjab, India.
Photographer: Dhiraj Singh/Bloomberg
A man walks though a field of mustard flowers near the Ranbaxy Laboratories Ltd. facility in Toansa, on the outskirts of Chandigarh, Punjab, India.

America’s $93 billion pipeline of generic pharmaceuticals often starts in places like Toansa, a village in northern India where a drug-making facility rises up beside mustard fields and manure-flecked ox-cart tracks.

Toansa’s factory complex -- owned by Ranbaxy Laboratories Ltd. (RBXY), one of India’s largest drugmakers -- has for years produced ingredients for dozens of pharmaceuticals sold to Americans, including AstraZeneca Plc’s top-selling heartburn medication Nexium, as well as its own generic copies of drugs including Pfizer Inc.’s Lipitor.

Ranbaxy and its Toansa factory are in the crosshairs of the U.S. Food and Drug Administration, which has recently taken a tougher stance on the quality of generic drugs originating in India amid complaints by doctors and others. The agency said last month that it has begun a $20 million program to test generic drugs.

In January, FDA inspectors paid a surprise visit to the facility in Toansa, in a rural area north of New Delhi, and found broken equipment, windows stuck open and flies “too numerous to count,” according to the FDA’s report of its inspection. Workers ran quality tests over and over until they got the results they wanted, the FDA noted.

Shortly after, the FDA banned the import of drug components made at the Toansa plant.

Ranbaxy voluntarily suspended all shipments of active pharmaceutical ingredients, or APIs, from Toansa and a second Indian plant, Dewas, after the FDA ban, Ranbaxy’s parent company, Tokyo-based Daiichi Sankyo Co., said in a Feb. 25 statement. Ranbaxy is continuing to make drugs for non-U.S. markets using API inventory from Toansa and Dewas and from external sources, Yasuki Minobe, a Daiichi spokesman, said by telephone March 4.

Beyond T-Shirts

A recent visit to Toansa found a town deeply dependent on the fortunes of Ranbaxy. While consumers in rich nations have learned about the workers who make their T-shirts and tennis shoes, less light has been shed on those who make medications that save and extend lives. The happenings in Toansa help illuminate working conditions in India’s pharmaceuticals industry, which has grown as wealthy governments seek to reduce the costs of medical treatments.

In August, a machine explosion at the Toansa facility left worker Rajan Sikka with shattered bones in his face, memory loss and partial paralysis. In early October, a contract worker there died from inhaling poisonous gas, according to a police account cited in his postmortem report. The worker had been handling chemicals after being asked to fill in for a technician who went on a break, according to a coworker and family members citing accounts from the worker’s colleagues.

Grim Sweep

Ranbaxy said there had been no gas in the area of the deceased worker, a 28-year-old who it said apparently died of cardiac arrest. It said Sikka, the injured worker, is recovering at home. Ranbaxy strives to “continuously strengthen and improve our systems, processes and occupational health and safety procedures,” a spokesman said in a Feb. 24 e-mail.

The FDA’s Toansa ban completed a grim sweep: Ranbaxy, based in Gurgaon in northern India, once had four Indian facilities registered with the FDA to send drugs and drug components to America. Toansa was the last of the four to have its products suspended from U.S. sale for failing to meet the FDA’s so-called current Good Manufacturing Practices.

Those last two suspensions came after Ranbaxy agreed last year to pay a $500 million settlement in the U.S., in which it admitted it sold batches of drugs that were improperly manufactured, stored and tested. It also pleaded guilty to four felony counts of knowingly making false statements to the FDA.

Strong Records

Several makers of generic drugs in India and elsewhere have maintained strong track records. “Unfortunately, the many Indian companies that understand good manufacturing and quality processes have been overshadowed by recent lapses in quality at a handful of pharmaceutical firms,” FDA Commissioner Margaret Hamburg said in a blog post while on a trip to India last month, during which she said the FDA would step up inspections of plants in India.

Pharmaceutical production in India has boomed in recent years. Indian companies sold about $5 billion worth of generics to the U.S. in the year that ended March 2013, according to an estimate from Hitesh Mahida, an analyst at KR Choksey Shares & Securities Pvt. in Mumbai.

While Indian producers accounted for 6 percent of the dollar value of all generic drugs sold in the U.S., they accounted for one-quarter of generics sold by volume, according to Standard Chartered, which analyzed data from IMS Health.

In 2012, branded drugs represented a $232.9 billion market in the U.S., with branded and unbranded generics accounting for another $92.6 billion, according to Standard Chartered.

Job Creator

India’s pharmaceuticals boom has created more than 4 million jobs, according to the Organisation of Pharmaceutical Producers of India, which includes positions in thousands of factories producing for domestic and international markets. The country has more than 500 factories registered with the FDA.

Drug manufacturing in India costs about half as much as in Western industrialized countries, according to PricewaterhouseCoopers. India’s wage costs are one-fifth of the level in the U.S. and 30 percent of those in Europe, PwC said.

Much of India’s pharmaceuticals industry is located in rural and small regional centers, according to the International Labour Organization, where there are parcels of land large enough for the factories. State governments have sought to benefit by wooing industries that promise to alleviate high unemployment.

‘Moxie Plant’

Ranbaxy started production in Toansa, a scattering of farmhouses on a fertile plain near Pakistan, in 1987.

It has opened facilities elsewhere in Punjab and in Madhya Pradesh and Himachal Pradesh states. Ranbaxy purchased Ohm Laboratories Inc. in New Jersey, which formulates medications and distributes them in the U.S., and by 2006 it had bought generics businesses belonging to Bayer AG in Germany, Aventis SA in France, GlaxoSmithKline Plc in Italy and Spain and generic drugmakers in Romania and South Africa. Daiichi Sankyo bought its majority stake in Ranbaxy from its Indian owners in 2008.

In a Toansa farmhouse, a woman who said her husband worked on-site for 16 years points across the mustard fields to a complex that by local count includes 14 production buildings: There’s the “Moxie plant,” she said, which makes the antibiotic amoxicillin, and the “Doxie plant,” which makes the antibiotic doxycycline.

At full capacity, the facility employed approximately 2,000 workers, said Sandeep Kumar, who said he supplies laborers to Ranbaxy through the agency he owns, Ramlal & Sons. Many factory employees come from the surrounding countryside, where men generally finish school before age 16.

Temp Workers

The plant’s many skilled employees often commute from neighboring towns. The plant also hires temporary workers for basic labor through a handful of local contracting firms. Laborers who handle chemicals at the Ranbaxy factory are required to train for a month and a half, said Amrik Mahi, whose agency, Mahi Enterprises, recruits workers for Ranbaxy and other companies.

However, two former contract workers said they received three to four days of training before starting work. Their duties included handling solvents and packing finished products, said the two workers, who, like several laborers and villagers who spoke about the plant, declined to be identified because they didn’t want to hurt their employment prospects.

Ranbaxy declined to confirm details of the plant’s size or employment numbers and didn’t respond to requests for comment about contract-worker qualifications.

Surprise Visitor

Toansa’s fortunes shifted on Jan. 5 when a Toyota Innova minivan arrived bearing an FDA inspector, five villagers recounted.

The factory’s planning department had counted on an audit in February, a plant technician said. At the time of the snap visit, construction was underway in the quality-control lab, another worker said. Managers were preparing to fix a broken piece of equipment in a different lab by February, he said.

In its week-long inspection, the FDA found the quality control and microbiology labs were in “significant disrepair,” according to the inspection report filed by the FDA that detailed eight possible violations of the Food Drug and Cosmetic Act. On Jan. 23, the FDA blocked exports to the U.S. from the Toansa factory of all ingredients.

“We are taking swift action to prevent substandard quality products from reaching U.S. consumers,” Carol Bennett, acting director of the Office of Compliance in the FDA’s Center for Drug Evaluation and Research, said in a statement.

Ranbaxy Disappointment

The statement advised patients to continue taking Ranbaxy drugs that are already in the U.S. market. Ranbaxy’s Ohm facility in New Jersey can still supply finished drugs to the U.S.

In a statement Jan. 24, Ranbaxy said it had suspended U.S.- bound shipments of API from Toansa once it received the FDA’s inspection results. It expressed disappointment at the ban, apologizing to stakeholders “for the inconvenience caused by the suspension of shipment.”

Ranbaxy’s move a month later to temporarily halt API shipments from Toansa to all other markets will let the company evaluate and inspect its manufacturing and quality control, Daiichi said in a Feb. 25 public statement.

Among those affected by the Toansa suspension was AstraZeneca (AZN), which has sourced esomeprazole magnesium, used in Nexium sold in the U.S., from facilities in France and in Toansa, said spokeswoman Vanessa Rhodes. AstraZeneca is now getting the ingredient from its French source, she said, adding that it has found no problems with the quality of its products already on the market.

Worker Safety

The FDA’s efforts don’t extend to assessing worker safety. That issue is often overlooked in India’s pharmaceutical factories, according to the People’s Training and Research Centre, an Indian nonprofit that works on occupational safety issues. India’s government doesn’t release consistent annual accident data, said the center’s director, Jagdish Patel.

Labor inspectors appointed in each state have the authority to inspect factories and penalize them for noncompliance. But there is a “chronic shortage” of inspectors in most states, Patel said.

The blast that injured Sikka, a 43-year-old father of two who had worked at the Ranbaxy factory for more than 20 years, came near the end of his shift on Aug. 23, according to a colleague at the factory.

Medical Bills

A door blew off of a vacuum device used to dry chemicals, sending a piece of steel that pinned Sikka against the wall, according to the colleague. It wasn’t clear if the incident was investigated. Workers weren’t informed of the circumstances leading up to the incident, the colleague said.

Sikka’s injuries left him largely confined to his bed and with swallowing difficulties that require him to take some nutrition through a tube into his stomach.

Ranbaxy covered medical bills for Sikka’s hospitalization and is funding his medications, a full-time caregiver and his salary, according to his doctor and receipts reviewed by Bloomberg News. Ranbaxy “provides best possible medical treatment,” compensation and support to the family in case of unfortunate circumstances, the Ranbaxy spokesman said.

On a recent Friday afternoon at Sikka’s home, his two teenage boys sat next to him on the bed doing their homework as a television set played a Hindi sitcom. Sikka slept, not responding to calls of his name.

A preliminary inquiry into Sikka’s injury by Punjab’s labor department found that the workers and supervisory staff at the plant had been insufficiently trained for their jobs, said assistant director of factories Narinder Singh, the official responsible for ensuring compliance in the Toansa area.

No Fines

The regulator asked Ranbaxy to ensure that its workers and equipment maintenance staff are better trained, Singh said in an interview. It hasn’t levied a fine on Ranbaxy, he said.

Ranbaxy declined to respond to requests for comment about training. Punjab state labor commissioner Harbhupinder Singh wasn’t available at his office and didn’t respond to calls to his mobile phone.

Ranbaxy requires workers to wear safety gear, said three current and former contract workers citing company rules. Those requirements are haphazardly enforced or ignored, workers said. One said he prefers not to wear the required goggles because they fog up. Men who wear large cloth turbans, a tenet of the Sikh religion practiced in the area, often find safety helmets unwieldy, one technician said.

Other workers said contract laborers sometimes do work for which they aren’t trained or outfitted.

Unresponsive Worker

In early October, contract employee Kulwinder Singh was asked to fill in for a technician in a job that involved unloading chemicals when he inhaled fumes, according to two workers and family members who said their information was based on accounts by workers in his unit.

Singh was found sitting, unresponsive, and was taken to a health center by ambulance and later transferred to a civil hospital in Balachaur, the Ranbaxy spokesman said. Singh was declared dead on arrival at the hospital, according to records at the nearby Kathgarh police station, examined by Bloomberg News.

The postmortem report prepared by medical officer Renu Mittal at the public hospital in Balachaur, about 30 kilometers away, stated that according to preliminary information from the police, Singh died from “inhalation of poisonous gas.” The police based the assessment on interviews with workers at the accident site, according to Sukhpal Singh, the head constable in the Ansron post.

Awaiting Biopsies

The final determination on the cause of death, Mittal wrote, is pending a final biopsy.

Five months after Singh’s death, no such determination has been made public. Constable Singh said results from chemical and pathology tests run at two government labs remain pending.

At one of those facilities, the Punjab Chemical Laboratory in Kharar, an unrelated corruption investigation had delayed work by up to six months, said lab head Rakesh Kashyap. In the other case, results from the Government Medical College in Amritsar were completed and mailed last month to Balachaur hospital, said the college’s head of pathology, Amarjit Singh. Mittal said in an interview that the Balachaur hospital hadn’t received the pathology report.

Ranbaxy declined to comment on the police report that cited gas inhalation. The Ranbaxy spokesman said by e-mail that there had been no vapors or gas in the area and that the worker had been wearing protective gear.

Accounts of incidents at the plant haven’t discouraged Toansa’s workers. The family of Singh, the deceased worker, is seeking a settlement from Ranbaxy that would include a job for his younger brother.

Locals still prefer to work at the factory than in the fields, said Krishan Kumar, chief of Toansa’s village council.

“You couldn’t find a single man who’s unemployed in this village because of this factory,” Kumar said in an interview. “Even people who’ve only passed fifth grade, they got jobs.”

To contact the reporters on this story: Ketaki Gokhale in Mumbai at kgokhale@bloomberg.net; Adi Narayan in Mumbai at anarayan8@bloomberg.net

To contact the editors responsible for this story: Reg Gale at rgale5@bloomberg.net; Anjali Cordeiro at acordeiro2@bloomberg.net Jeffrey D Grocott, Bruce Rule

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