GVK BIO in Trouble
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Case Code: BSTR488 Case Length: 10 Pages Period: 2014-2015 Pub Date: 2016 Teaching Note: Not Available |
Price: Rs.500 Organization: GVK BIO Industry: Pharmaceutical Industry Countries: India Themes: Business, Operational Strategy, Management |
Abstract Case Intro 1 Case Intro 2 Excerpts
Excerpts
Clinical Trials in India
Clinical trials were experiments conducted to test the effect of a medicine and to check whether the medicine served the intended purpose. These trials were conducted on human volunteers to test the safety and effectiveness of new drugs, treatments, therapies, surgical procedures, and new medical devices before they were sold in the markets and were made publicly available. Analysts felt that unlike the West, the Asia-Pacific was a productive ground for patient recruitment in clinical trials, with patients’ readiness to participate usually being high. In addition, lifestyle and stress-related diseases such as Diabetes Mellitus and cardiovascular diseases were widely reported among the Asian population....
GVK BIO Enters Clinical Trials
GVK BIO started clinical trials in 2008. Some of the clinical trials carried out by GVK BIO proved fatal. In 2008, a twenty-five-year-old youth, KSurender (Surender), who volunteered to participate in a bioequivalence test for felodipine, a drug being tested to treat high blood pressure, died during the clinical trial process conducted by GVK BIO, according to media sources. Surender was given the first dose of 10 mg of felodipine on November 26, 2008, and was discharged three days later in a healthy condition. He was asked to come again for the second dose on December 6, 2008. However, on the second day, Surender complained of chest pain before he was given the dosage and was taken to a hospital......
The EU Ban
According to some reports, a personal crisis in the life of a whistle-blower led to an international scrutiny of GVK Biosciences. The employee, who was allegedly in love with his junior, eloped with her in 2011 prompting the girl's parents to register a complaint with the police. As a result, GVK BIO dismissed the employee. An investigation by police found that the employee after being dismissed sent emails to some drug regulatory authorities in the world regarding the quality of clinical research conducted at GVK BIO, raising doubts among the drug regulatory authorities about the credibility of the clinical research done at GVK BIO. The dismissed employee reportedly sent 15 anonymous emails to the United States Food & Drug Administration (USFDA)....
The Aftermath
GVK BIO was badly affected by the EMA decision. It lost momentum in its clinical trial business, which contributed about 10-12% to its total revenues. The company lost over US$500 million and orders were put on hold. Moreover, it did not receive a single order after the ban by EMA. Kantipudi said, "We have not resorted to any kind of manipulation with the data. We do accept that we did not have completely fool proof processes but we have improved it. While the EU has taken only a preliminary action, we have agreed to cooperate with the regulating agencies in the interest of public health to ensure quality drugs. We used to conduct over 15-20 studies per month, which has now fallen to six or seven.....
The Road Ahead
In April 2015, the Indian government extended its support to GVK BIO against the recommendations by EMA. The government was ready to take "commercial and legal action" against the EU if it did not react positively to evidence, a senior official told Business Line. The government had even got independent cardiologists to examine the ECGs, and they had given GVK BIO a clean chit in 2015. According to Indian commerce secretary Rajeev Kher, "We have met the European Medicines Agency (EMA) and the French agency and given them evidence to show the tests by GVK Biosciences were not manipulated. The European agencies have suspected the clinical trials on grounds that are absolutely flimsy. Not just GVK, but the companies for which the clinical trials were done, which include several multinationals, have given a plethora of evidence to show that there was no manipulation."...
Exhibits
Exhibit I: A Short note on Contract Research Organizations (CRO)
Exhibit II: Products and Services offered by GVK BIO
Exhibit III: Key Financials of GVK Power & Infrastructure Ltd
Exhibit IV: GVK BIO’s Value 'CIRCLe'
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