The U.S. Food and Drug Administration (FDA) is introducing more stringent regulation regarding quality standards for drug products manufacturing, which will push up costs for Indian drug producers, an analysis by global credit rating agency Crisil predicts. Even though the regulations are not country-specific, the report anticipates higher compliance costs for pharmaceutical companies in India because of "cultural differences."

However, despite higher compliance costs, large Indian companies are well-positioned to remain competitive in the U.S. pharmaceutical market due to their financial flexibility. About one-third of India's drug product exports go to the United States, coming in at a total value of $4 billion per year, the Economic Times reported.

But as Indian drug production accounts for such a large proportion of drugs on the market, stricter regulations are expected to have an impact on operations. The FDA has approved more than 150 formulation facilities in the country but those have been under tight scrutiny over the past few months due to issues such as cultural differences, attitude of employees, inadequate interpretation/understanding and absence of due process.

According to Crisil's analysis, compliance costs for Indian drug makers will affect hiring and training of staff and consultants, as well as investments in equipment upgrades to comply with the new requirements.