Andhra Pradesh's killer pharma industry

Andhra Pradesh's killer pharma industry

The antibiotics we consume are now being found in effluents discharged by industrial estates in Andhra Pradesh. Shockingly, the quantities are not minuscule. Researchers who collected samples and then analysed them say the amount of antibiotics they detected has never been reported anywhere else in the world. These industrial estates produce the bulk drugs that go into the medicines we take. It is important to note that these antibiotics are supplied the world over.

In effect, the business of pollution is outsourced--the biggest industries in the rich world outsource their production to the big manufacturers in the poor world. In the same way, the big players in the poor world outsource their dirty production to the small producer.

The cost of pollution is not paid either by the pharma company or the consumers of the drugs. It is paid by the people who live in the areas where drugs are manufactured.The price is high but it is not calculated because nobody has calculated the impact of this contamination on people who live near industrial estates.

The study
In a recent study, 'Effluent from drug manufactures contains extremely high levels of pharmaceuticals', published in the Journal of Hazardous Materials (Volume 148, July 2007), researchers screened samples of effluents from a common effluent-treatment plant (cetp) in Patancheru in Medak district, Andhra Pradesh, for 59 drugs. "Initial screening suggested that 21 of these were present at concentrations above 1 microgramme per litre (g/l). An independent, quantitative analysis in our laboratory of the nine tentatively most abundant drugs and two additional antibiotics confirmed the findings.... All 11 drugs were detected at levels >100 g/l. To the best of our knowledge, the concentrations of these 11 drugs were all above the previously highest values reported in any sewage effluent," says the paper. The maximum concentration was that of the antibiotic ciprofloxacin 28,000-31,000 g/l (see table Drug cocktail). This corresponds to approximately 45 kg of active pharmaceutical ingredients per day, the equivalent of the total amount consumed by the Swedish population (nine million) over a five-day period reports the study conducted by the researchers from the Sweden-based Gteborg University (see box Antibiotic research).

Clueless
Patancheru Enviro-Tech Limited (petl), the company that runs the cetp, says it is not aware of the findings published by the Swedish scientists. "I am not aware of such a study. The tests done to check for chemical oxygen demand (cod; which are mandatory) will also detect pollution by antibiotics, if any, in the effluent. That is enough," V R Akella, executive vice-president, petl, told Down To Earth (DTE). He does not mention that there are no standards for antibiotics in effluents. Neither companies nor regulators check for the presence of these contaminants.

It is also a fact that the cod does not identify different chemical contaminants, which would have different levels of toxicity. The presence of antibiotics in effluents is, therefore, not part of the pollution management story of the estate. It is only a by-product, which is unaccounted by regulation and unseen by regulators. Rajeshwar Tiwari, member-secretary, Andhra Pradesh Pollution Control Board (appcb), admitted he was unaware of the study, but said "We will look into the study and initiate necessary action."

On the other hand, Kishan Rao, a doctor in Patancheru involved in the fight against pollution, was disturbed. "This kind of exposure will lead to antibiotic resistance among members of the local community. All vital organs will be affected due to excessive exposure to antibiotics," he said.

It's not just that there are no standards for antibiotics, the regulation of other contaminants is so lax compared to industrialised countries that there is little hope of being able to screen antibiotics through them. In the industrialized world, industries have to invest in expensive equipment to get rid of tiny toxins. It is for this reason that drug manufacturing is very expensive in the industrialised world. There people have money to buy antibiotics, but no money to invest in pollution control. Crucial to understanding the global pharmaceutical industry is recognising its chain of outsourcing.

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Drug traffic

Poor pollution control fuels boom

For Medak the watershed year was 1975, when the government launched an initiative to industrialize an 'industrially backward' area. The Patancheru Industrial Estate was set up, with subsidies and other incentives. The area offered advantages in terms of availability of land and water, proximity to Hyderabad and location on the national highway linking Hyderabad to Mumbai. By 1995 there were more than six estates near Hyderabad with about 400 units.

Pharmaceuticals drove the boom. Says M Narayana Reddy, president, Bulk Drug Manufacturers Association (bdma) "Of our 500-odd members almost 50 per cent are from Hyderabad. Forty per cent of the total Indian production of drugs takes place in Andhra Pradesh. Of this 80 per cent are in the districts around Hyderabad." Bulk drugs are the active chemicals in powder form, used as the main ingredient in medicines. Drug companies can themselves manufacture bulk drug for their branded or generic medicine or outsource this process. Estates in Medak have both kinds of manufacturing.

According to a 2005 report of the Federation of Indian Chambers of Commerce and Industry (ficci), the Indian pharmaceutical industry is valued at approximately us $8 billion. Globally, Indian industry ranks 4th in volume and 13th in value, with over 20,000 units. Of these around 260 are in the organized sector. Most companies specialize in bulk drugs. This is clearly where business makes sense.

The outsourced drug business is part of India's competitive advantage. According to a May 2007 report by the us International Trade Commission (usitc), India is growing in the contract-manufacturing segment. Most Indian companies are partners of multinationals, providing 'contract research and manufacturing services'. In other words, developed countries outsource to India the manufacture of ingredients.

Industry admits that the business is changing to respond to global needs and rules. According to the ficci report, after the wto-mandated intellectual property regime came into force, Indian pharmaceutical manufacturers could not manufacture patented drugs. New business models included contract research (drug discovery and clinical trials), contract manufacturing and co-marketing alliances. In 2005, the Indian drug and pharmaceutical contract research and manufacturing services market was estimated at us $532 million with contract manufacturing accounting for nearly 84 per cent. The rest consisted mainly of research (excluding clinical trials). Both contract research and manufacturing grew by more than 40 per cent in 2004-05. Industry experts say Indian companies have the capacity to gain 35-40 per cent of the global market.

Bulk drugs account for nearly 60 per cent of the pharmaceutical export business. "India's largest single export market continues to be the us, which is the world's largest drug market. Exports to the us grew from us $429 million in 2003 to us $589 million in 2005, or by 37 per cent," says the usitc report. For individual products, India's leading drug exports include antibiotics and vitamins. Antibiotics exports are on the rise. They increased from us $55 million in 2002 to us $271 million in 2005. During the first half of 2006 (January-June), the figure was us $179 million.

Indian companies benefit from a greater acceptance of generic drugs among the us public, tremendous pressure on healthcare providers to reduce costs, and impending expiration of patents on drugs with annual sales of $50 billion," says William Greene, the author of the trade commission report.

Cutting costs
Manufacturing costs in India are 30-40 per cent lower than those in the us and western Europe and labour costs are one-seventh of that in the us-- that's why outsourcing works. The usitc report quotes a Confederation of Indian Industry estimate that says it costs us $100-200 million to develop a new drug in India compared to us $500-900 million in the us.

Cost-cutting on pollution control is an important factor behind this competitive advantage. Industry accepts that investment on pollution control is a significant part of the cost--with some estimates putting it at up to 20 per cent of capital investment. Lax regulations make cost-cutting possible. "For effluents at new us drug plants, the environmental protection agency sets strict limits on at least 34 chemical compounds, from acetone to xylene. But in Patancheru, where normally only the total quantity of pollutants is tracked, there's almost no information about specific toxic compounds. That's serious because some of the drug industry's solvents, by-products and ingredients can harm people even at low concentrations," says Stan Cox, senior research scientist at the Land Institute, Salina, Kansas. He has studied the Indian pharma industry and Patancheru in depth.

While industrialized countries outsource production to India to cut costs, the big Indian companies sub-contract many, including the most polluting, processes to small-scale firms, which are notorious for lack of pollution control. This enables the big names to claim zero-discharge records (see box Contract killing).

In recent years, the Indian bulk and intermediate drugs sector has been hit because China has driven costs down further, flooding the world, including India, with its extremely low prices for these drugs. Indian companies, many of them located in Medak, were forced to shut or cut production because they could not compete. But business is looking up again. The price of Chinese drugs has gone up after a cut in export incentives and, reportedly, because China is cleaning up its pollution.

In India, as environmental regulations and costs for pharma industry have increased, it makes business sense to downgrade its pollution standards. Industry finds it cannot afford to comply with environmental safety measures while facing cutthroat competition. Environment management costs are between 30 per cent and 35 per cent. According to industry sources, bigger companies have already started running small units to meet in-house requirements under different names. On the other hand, outsourcing has established a symbiotic relation between large and small players.

The regulators' stick is faced by small-scale industries, which are not financially equipped to handle costs of pollution. "Environmental regulations have seen the small-scale players shutting shop. We ought to find better production and environment management technology," says Narayana Reddy.

But this avoids the basic question. The cost of pollution should be paid not just by polluters but by consumers too--not by innocent bystanders.

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Bad medicine

Pharma's health fallout devastating

The industrial boom has hit areas around Hyderabad on many fronts--health and livelihoods pre-eminently. There are numerous cases of young people dying without any evident cause and agriculture has become unviable in the polluted environment.

The Sultanpur panchayat in Medak, for instance, comprises four villages with a population of 2,727. Until over a decade ago almost all the 669 households were dependent on agriculture. Now less than 10 per cent cultivate. "Industrial pollution has completely destroyed us," says Ankagalla Sahdev, the sarpanch. The land that is still cultivated does not yield much. "Earlier, people used to get about 100 bags of rice (1 bag is approximately 75 kg) from a hectare (ha). Now it is down to 10-15 bags," says G Yadagiri, the panchayat secretary. Approximately 3,000 ha of agricultural land in the industrial area has been damaged.

Left with no option, over 20 people of Kristareddypet village have sold their land, mostly to real estate developers from Hyderabad. The village tank is contaminated, they say. At the other end of the tank lies the Bollaram industrial estate. "Water is highly contaminated and unfit for drinking. Productivity is hardly 20 per cent of what it used to be," says T Laxmi Narayana, president of the village water-users' association. "For a few years in the early 1990s villagers were compensated at Rs 3,750 per hectare. Now we get nothing."

Drinking water is supplied through a pipeline from the Manjira reservoir. A total of 22 villages in Medak district get piped water, though the supply is erratic. Years of drinking contaminated water and living in a toxic environment have taken a toll on their health. "In the past few years we have seen so many cases of young people dying after suddenly falling ill," says Sahdev. "We have seen an abnormal rise in stillbirths," says Raja Ramsingh, a mandal parishad member and resident of Pocharam village, just downstream from the petl discharge point into the Iskavagu monsoon drain. "Asthma, kidney problems, rashes and stomach disorders are most prevalent," says Ramsingh. "Air, water and food in the entire area is poisoned," says Kishan Rao, a doctor, who has treated innumerable patients in the past two decades and carried out several surveys to study the impact of pollution. "Respiratory diseases, cancer, skin diseases, congential abnormalities, miscarriages, abortions, premature deliveries and impotency are highly prevalent. I am sure all these will be well above the national average," he says.

From 1998 to 2002, a report was prepared by G Nagaiah of Osmania Medical College, Hyderabad. It found that the morbidity rate in the area had increased from 10.18 per cent to 25.49 per cent over 10 years. In 1998, Environment Protection, Training and Research Institute, Hyderabad, also found higher morbidity rates in villages around the Asanikunta and Kristareddypet tanks.

The most recent health study in area was released in October 2004 by Greenpeace. Entitled 'State of community health in Medak district', it was based on nine study and four control villages. Information on 10,874 individuals was gathered. The study group had 11 cases of cancer and 16 of heart diseases; the control villages had none.

The following disease statistics, which were recorded by the survey, shows clearly how the study area was affected in comparison to control areas.

The fact that Medak is paying the price for hosting one of the biggest manufacturing centres of bulk drugs and pharmaceuticals has drawn widespread attention. "Given the human and ecological costs of India's drug industry, I propose that our (us) Food and Drug Administration add additional warnings to labels on imported drugs. For example side effects, including drowsiness, skin rashes, gastrointestinal distress, neurological disorders, cardiovascular problems and/or cancer, may be encountered by those living near the site of manufacture of this drug," writes Cox.

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What treatment?

Regulation has not worked for drug industry

It is not as if industry and government have not worked to control pollution. Two common effluent-treatment plants (cetps) were set up in Andhra Pradesh. The Patancheru cetp, which started functioning in 1994, has a capacity of 7.5 million litres a day (mld), while the other at Jeedimetla in Ranga Reddy district, established in 1989 and run by Jeedimetla Effluent Treatment Limited (jetl), can treat 5 mld. The cetps were set up so that effluents from small-scale units could be collected and treated.

These plants remain underutilized, though the manufacture of drugs has increased manifold. Currently, jetl utilizes only 33 per cent of its installed capacity, and industrial waste is only 14 per cent of the total waste it treats.Similarly, only 20 per cent of petl's capacity is utilized. Nobody can explain why this is happening. Is it because wastewater generated by the units has decreased in spite of increased production? Or is it because the industries are generating wastewater which is not reaching the cetp?

The problem is partly because effluents are transported to the cetps in tankers. And nobody has an account of the total wastewater that should be transported. appcb says it does not have up-to-date data on water use and effluent generation. Board officials were reluctant to share even 'old' data with dte , saying it was no more relevant. Their only excuse was that product changes were so frequent that keeping track of effluent generation was a difficult proposition. However, they accept that the cetps provide for roughly 17-27 per cent of industrial units in their catchment areas (see table Unaccounted waste). Tiwari of appcb, however, says, "Since July 2007, it is mandatory for all industries to become members of the cetps and send their effluents for treatment."

The cetp management maintains that the wastewater quantities are lower because some units have shut down and others have individual treatment systems. In July 2007, an affidavit filed by appcb in an ongoing case on cetps in the supreme court also accepts this version. It says, "The reduction of effluent is due to in-house treatment by some of the industries."

According to existing regulations, units that are not members of cetps are expected to treat their effluents themselves. To do this, they have to set up systems to treat and recycle effluents or install multiple-effect evaporators (mees) to deal with effluents with high total dissolved solids (tds). An mee is an apparatus for efficiently using the heat from steam (generated in boilers) to evaporate water from effluents and convert tds into a concentrate, which is then sent to a hazardous-waste-disposal site. But appcb officials are not ready to commit themselves about whether these systems have been set up or whether they work.

Local people say effluents are just dumped. "During the monsoon it is a common practice for units to illegally dump effluents along the Hyderabad-Pune highway," says Anil Dayakar, executive director, gamana, a Hyderabad ngo. Members of a task force constituted by appcb to check illegal dumping say dumping is prevalent. Activists say only a few violators are booked.

"There are several industries dumping wastes into water bodies and land," says S Jeevananda Reddy, a member of the Hyderabad Local Area Environment Committee, set up by the supreme court-appointed hazardous waste monitoring committee (scmc). In the Bollaram industrial area, dte found jet-black effluents flowing out in pipelines. In May 2006, the local area committee had analysed samples from a lake in the area, Asanikunta, and detected eight chemical compounds, which matched with effluents from 10 units in Bollaram.

There is a reason why 'dumping' may be the preferred option. In a 1998 order, the apex court had laid down minimum standards for effluents received by cetps. According to this direction, effluents which exceed tds and cod of 15,000 mg/l will be rejected. Industry finds it difficult to meet these standards because of high use of salts. Says a March 2004 report by a fact-finding committee constituted by the Andhra Pradesh High Court during 2001-2003 petl turned away 357 tankers. Local citizen groups say their contents were dumped into drains. "If this is happening it is appalling," says an scmc report of October 2004.

Just diluted
cetp managers say they use domestic sewage to dilute effluents. This, of course, still means toxins are not treated, merely diluted. After years of confabulations and in spite of the intervention of the apex and high courts there is little consensus on what is to be done. Frequent changes make for confusion about which standards are to be followed (see table PETL divergence).

Resistance problem
The plants do not work partly because they were not built to work. This was accepted by appcb in an affidavit to the apex court in early 2007. It said biological systems used in cetps were not designed to treat non-biodegradable and highly toxic waste.

The Gteborg University study pointed out that toxic pharmaceutical waste would impair the performance of microorganisms in biological systems. It also said antibiotics in effluents could be playing a dangerous role in making the treatment more ineffective. "Of further concern is that the industrial effluent is mixed with human sewage within the plant to improve biological treatment efficiency. There is a risk that pathogens will be exposed to antibiotics for prolonged periods. Ciprofloxacin is genotoxic and induces horizontal transfer of resistance between different species of bacteria, effects that may be observed at concentrations as low as 5-10 g/l. Therefore, the recipient waters and the treatment plant itself may be spawning grounds for resistant bacteria," the study said.

Treatment is expensive, partly because very little of capacity is utilized. The unit cost at petl is Rs 78 per kilolitre and at jetl Rs 166 and Rs 583 per kl for the biological system and mee. Industry is worried that stringent regulations will raise costs further.

Disposing treated waste
It matters where the treated effluents will be disposed of. In Patancheru, industry and regulators are constantly looking for new ways to dispose of treated effluents. Currently, treated effluents are discharged into Iskavagu, a monsoon drain which travels 1.2 km to meet Nakkavagu, another monsoon drain, and finally meets the Manjira river, in contravention of an apex court order (see timeline Sordid saga). jetl's treated effluent is discharged into a 9.5-km pipeline connecting to municipal sewer flowing into the Amberpet sewage-treatment plant, which treats Hyderabad city's waste. The treated effluents--of Hyderabad and industry--are then disposed of into the Musi river.

Now petl wants to do the same. In 2000, the Central Pollution Control Board had suggested what is called the 18-km pipeline (actually 22.5-km pipeline) to connect it to the municipal sewer (Kukkatpally-Secunderabad main) at Balanagar which then travels over 30 km into the Amberpet plant. The apex court endorsed this plan (see map Wasting journeys). But activists did not. "This is only a camouflage. It will transfer pollution from Patancheru to the Musi and villages downstream. The dilution with sewage will only bring down concentration of pollutants. The overall pollution load will remain the same," says J Rama Rao, chairperson, Forum for Better Hyderabad, an ngo.

The Amberpet plant's capacity is being augmented from 113 mld to 339 mld at the cost of Rs 84 crore and its treatment system upgraded. But engineers are worried about the impact on the plant (which is a biological system) once effluents are mixed. appcb says cetps must be upgraded and discharge standards made more stringent.

As a result the pipeline is stuck. scmc has directed appcb not to allow discharge of treated effluents into the Amberpet stp. In January 2007, the pipeline was completed at a cost of Rs 12.5 crore, but petl continues discharging effluents into Iskavagu and appcb is still looking for a way out of the impasse.

How clean?
It also matters how clean treated waste will be. The management of cetps claim they meet the effluent standards specified for disposal into sewers, which are much more lax compared to standards for disposal into water bodies. In October 2004, scmc took strong objection to relaxed inlet and outlet standards and directed appcb to specify stringent norms. In response, on August 5, 2005, the board issued directives to both cetps modifying inlet and outlet effluent discharge standards. Managers of the effluent plants were directed to install necessary equipment to "ensure that treated effluents meet the reusable standards".

This direction was upheld by the apex court in July 2007. But industry argues the standards are unrealistic. It says if units have to treat waste to such levels--so it is reusable--then there is no need for the pipeline for transporting treated effluents. Industry continues to argue it is mixing sewage with industrial effluents and this dilutes and gets rid of pollution. However, in an affidavit to the apex court in March 2006, appcb categorically said dilution was not a permanent solution. "We don't want cetps to damage the stp and the river," says Tiwari. The court gave the cetps 18 months to meet standards in July 2007 (see table Control countdown).

Tiwari is elated. "This is the first time cetp inlet standards have been made so stringent," he says. The question now is how these standards will be met what technologies will be used and at what cost. Whatever is done to upgrade treatment plants, regulators will have to keep in mind that new technologies will have to deal with the problem of antibiotics, especially since there are no standards for them.

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Way out

Rich producers, users must pay for clean-up

Even after years of protest by people affected by this pollution, the problem remains. Waste is not being transported to effluent plants; it is not known how much waste is generated and so how much should be treated and how; and once treated where waste should be disposed of ; and if it is disposed of in rivers or lakes whether it is clean enough. Clearly, much more will need to be done and this will require both investment and effective regulation.

In all this, the high quantities of antibiotics found in effluents from pharmaceutical units, point to another danger. The cost of treating tiny chemical contaminants is expensive. Who can pay for it? Who is producing it? And for whom? The antibiotics found in effluents are being sold by the biggest in the business today.

Industry says it needs to outsource production of intermediates as part of its business model.But it does accept that it also outsources pollution to the smaller manufacturers who are even less capable of dealing with contaminants. Unfortu-nately, nobody tracks the chain. "Who is outsourcing to whom is classified information," says Jeevananda Reddy. He gives an instance. "When we visited one factory we found the production was three times higher than the capacity. The work was being done for a major unit in the Bollaram industrial area."

"In future, policies will be formulated so that outsourcing cannot be done without the permission of the board," says Tiwari. Clearly, if this is done, it would build the chain for greater user and consumer responsibility. It is evident that pollution is being outsourced because it is too expensive for even the rich to treat. Then how can poor industry, especially the small-scale sector, be expected to pay its costs?

No wonder it is poor industry and the poor people who are being asked to discount their present so that the rich pharmaceutical industry and rich consumers of these medicines can prosper and stay well. The business stinks.