Executives say regulatory environment creating bottlenecks for business
Source: Columbia Regional Business Journal
February 19, 2015
The regulatory climate coming out of the recession has created a bottleneck for businesses, local CEOs said Thursday during the Columbia Regional Business Report’s quarterly “Power Breakfast” networking event.
“We are heavily regulated on the federal side,” said Lou Kennedy, CEO and co-owner of Nephron Pharmaceuticals. “It’s a waiting game, is the nicest way I can put it. We’ve really been impeded in the sense that we can’t pick our own time clock, and have to be very patient, and I guess you could say aggressive in terms of business.”
Nephron, a leader in manufacturing generic respiratory medications, has been handcuffed in generating revenue as it waits for the Food and Drug Administration to review its products, Kennedy said, who was joined on the panel by Robert Hill, CEO of South State Bank; Bill Mahoney, CEO of SCRA; and Jim Reynolds, CEO of Total Comfort.
Review time is a critical aspect of the company, which sells drugs anywhere from 7 cents to $1.15, and it currently takes about three years to get a generic pharmaceutical review to market, Kennedy said.
Those review times have dragged as the FDA weathered through budget sequestrations and cutbacks, she said. The agency is, however, expected to visit Nephron in the next week or two, cementing the next big phase for the company.
“We are thrilled. We’ve been waiting on this since last June,” she said at the event, which was held at the Columbia Marriott. “It’s an exciting time for us, and that’s our next big milestone to reach in order to be officially open for business.
“Finally, instead of a money drain, we can potentially produce some revenue.”
A similar slowdown has occurred at South State Bank, Hill said, due to the 2010 Dodd-Frank legislation, which was signed into federal law as a response to the collapse of the financial sector that led to the recession.
“They’ve passed the law, but they can’t really tell you how to implement the law,” Hill said. “So I think in any business environment, when you don’t have clarity it creates higher cost and confusion. And not just for us, but even those that regulate us.”
Hill said regulators may have come into South State Bank four to six weeks a year as recently as five years ago. But now as many as 20 to 30 regulators are in at a time “pretty much every week of the year,” he added.
“And this is for a company that never lost a penny during the financial crisis,” he said. “This is a company that never lost and never cut their dividends during the financial crisis. Everybody is painting with the same brush.”
This regulatory environment is ultimately costing the consumer, both CEOs agreed. From getting a mortgage done to having access to cheaper medicine, time is not on the buyer’s side.
“Whatever the step of the process is, it just adds time,” Hill said.
Kennedy said Nephron is being proactive in the new environment by beefing up departments and looking toward a more regulatory influence, trying to determine whether it might give the company an open door or just impede it. But the waiting game will still remain.
“It’s hard to wait for the FDA … to put us on their schedule,” she said. “But that’s what we’re expected to do. We do what we can and what we can control and the rest of it has to come.”
Reach Chris Cox at 803-726-7545 or on Twitter @chrisbcox.