Deloitte Survey Report

Life sciences sector growth appears to have outpaced compliance management processes:

Deloitte Survey Report

·         Poor compliance management hindering growth: Challenges include implementing GxP guidelines (52 percent) , complying with professional and industry body guidelines on pricing, sales, promotions (42 percent)

·         Poor internal controls key contributor to malpractice and non-compliance (61 percent)

·         Poor Data and quality systems (45 percent), lack of skilled resources to manage compliance (42 percent) highlighted as a key concerns in compliance management

·         Whistle blowing gaining traction as an effective tool in detecting malpractice and fraud (76 percent)

Mumbai, June 3, 2015:The fast pace of growth in the life sciences sector in India appears to have outpaced compliance management processes, according to Deloitte India’slatest survey report titled Managing Growth Through Better Compliance Management.According to the report, the rise in regulatory noncompliance in the sector may be attributed to the evolving changes in regulatory standards, which have resulted in limited availability of compliance management professionals equipped to manage these requirements. About 55 percent of survey respondents have indicated that their compliance teams were not adequately trained to address regulatory requirements.

“In the last two years, most regulatory bodies have introduced new areas of scrutiny beyond just testing drug efficacy, and now involve risk management and mitigation programs for R&D laboratories, manufacturing facilities and procurement functions. For compliance management professionals to familiarize themselves with these changes and become adequately trained in them requires time. In the interim, companies could be exposed to vulnerabilities arising from non-compliance,” said Rohit Mahajan, Senior Director, Deloitte Touche Tohmatsu India Private Limited.

Besides talent shortage, lack of an efficient internal control/ compliance system (61 percent of survey respondents), inadequate utilization of technology to identify red flags (45 percent), and lack of a zero tolerance approach towards noncompliance and malpractice (45 percent) were indicated as key contributors to noncompliance and malpractice in the sector.

Further, 30 percent of survey respondents said they had experienced noncompliance with GxP guidelines in the last two years. However, 45 percent said they had not experienced any type of noncompliance.

Around 48 percent of survey respondents confirmed that compliance strategy was not a key area earmarked for investment in their organizations, indicating that perhaps senior management did not consider this area as a high risk with serious consequences in the event of non-compliance.

“Organizations that view fraud risk management and compliance management as strategic activities,are able to identify instances of noncompliance and work towards mitigating such incidents. Unless the life sciences sector looks at compliance management strategically, it will not be able to make the necessary investments in tools and technology to build a robust control environment that can mitigate non-compliance,” Mr. Mahajan said.

When asked how organizations detected fraud, noncompliance and malpractice, 76 percent of respondents indicated relying on whistleblowing channels. Upon detection of fraud 85 percent of respondents said they launched an internal investigation by a specially appointed committee, while 82 percent confirmed that some form of disciplinary action was initiated as per existing policies and fraud and compliance risk management frameworks.

The survey report also discusses the key types of noncompliance observed in the sector along with providing a roadmap for organizations to build an effective compliance management system.

TheDeloitte India life sciences sector survey reportwas developed basis responses from33 leading organizations which included MNCs with operations in India; Indian organizations with operations overseas and in India; Indian organizations with domestic operations; and Captives of global life sciences organizations producing products for the parent organization. Sub-sectors such as pharmaceuticals, medical devices, contract research, biotechnology and clinical labs were represented in the survey.

Notes to the editor for reference purposes only:

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