An Indian company struck gold by making vital drugs affordable. But there’s a catch

Rohit Mukul’s Instagram feed contains everything you would expect from a man named this year on one of Forbes’ coveted 30 Under 30 lists. Alongside photos of seascapes, sports cars and snowmobiles are videos in which the businessman explains how his company operates: by making high-quality medicines affordable for the people who need them.

In a reel from February 2025 titled Scammed, he explains how needless marketing costs are pushing up the price of drugs made by major brands. “Millions of Indians are overpaying for their medicines,” he says.

Mukul’s family have made a name for themselves providing an alternative to this “madness”, as he describes it. He runs Zeelab Pharmacy, a fast-growing chain of high-street chemists that sells medicines made by Zee Laboratories, the company started by his father. Zee Labs, as it’s known, has become a major player in the Indian pharma market by making so-called “generic” drugs – cheaper copies of patented medicines. The company now employs more than 2,000 staff and exports its drugs to 50 countries. Its medicines treat everything from epilepsy to diabetes, infections and mental health conditions.

Generic drugs are used by healthcare systems around the world – in the US, for instance, they make up about 90% of all prescriptions – and about a fifth of them are made in India. Although they’re sold at a knock-down price, generics must contain the same active ingredients as the original. And everywhere Zee Labs markets its products, it emphasises their high-quality credentials.

But the Bureau of Investigative Journalism (TBIJ), in collaboration with Context, part of Thomson Reuters Foundation, can reveal that the reality is very different. In fact, Zee Labs’ drugs have failed at least 86 quality tests by Indian regulators. The company is facing multiple criminal cases, has received a “stop production” order and was subject to serious findings during an inspection of one of its factories. Its medicines have also failed tests by regulators in Nigeria and the Philippines – and Nepal has gone as far as to ban all imports of Zee Labs drugs. Our investigation earlier this year found bad chemotherapy medicines made by the company had been shipped to sub-Saharan Africa.

Speaking to TBIJ and Context, Mukul insisted on Zee Labs’ high manufacturing standards. Quality, he said, “is a cornerstone of pharma, and it is non-negotiable”.

Yet the sheer number of failed tests tells a different story. Aline Plançon, former head of Interpol’s global health and safety sub-directorate, said it points to a pattern of neglect on the part of Zee Labs. “There is a very big problem with this company, and it deserves to be shut down and at least carefully investigated … it’s obviously issuing and manufacturing bad-quality medicines.”

In the meantime, though, Zee Labs drugs continue to be sold and shipped around the world. So why has the company been allowed to continue operating?

Litany of failures

Zee Labs was set up in 1993 by Rohit’s father, Rajeev Mukul, and was soon riding the wave of a booming drugs-making industry. By the 2010s, the company had expanded from one factory to four (it has since added two more) and Rajeev’s business empire had grown to encompass real estate, hotels and plastics. In 2013 he collected an award from then president Pranab Mukherjee for making high-quality drugs.

But such awards belie the quality issues that have plagued Zee Labs in recent years. Since 2018, the company’s drugs have prompted Indian regulators to put out an alert (which is triggered by a quality-test failure) about 10 times a year.

And in December 2022 – two years before Mukul’s Instagram reel proclaiming the high quality of Zee’s drugs – an inspection of one of the company’s major factories returned disastrous results.

Officers from India’s central drug regulator, the CDSCO, and the state regulator of Himachal Pradesh found enough serious issues to ask the company why they shouldn’t cancel two of the plant’s key manufacturing licences. The production in one section of the plant, which made hormonal drugs, was stopped altogether. That year, the plant did not renew its WHO-GMP certificate, a credential developed by the World Health Organization that shows products are meeting certain quality standards. Many countries will only import and sell medicines that have been manufactured according to these practices.

Around the same time, there was an international storm brewing. In December 2022, the Nepalese government banned all imports from another Zee Labs plant because it didn’t comply with the country’s quality requirements. The Nepalese regulator told us that the company is currently prohibited from “importing or distributing any pharmaceutical products” in the country.

Before that, in June 2021 and March 2022, the Philippines had announced recalls of a Zee Labs antibiotic that had failed quality tests. And in Nigeria, three different Zee Labs medicines were prevented from entering the country because they were judged by its food and drug agency to be unsafe.

Zee Labs told us that Nepal “never banned the import” of the company’s drugs, only that the country’s regulator raised observations which Zee Labs said it then addressed. It then took the “commercial decision” not to apply for reinspection.

Mukul told us that the loss of the WHO-GMP certificate was also a company choice. The Indian regulators, he said, had undertaken multiple risk-based inspections of all the company’s factories and never found any major issues – “we passed them with flying colours”. (This is not true. We have seen a letter sent by the Himachal regulator after the December 2022 inspection asking the plant to stop production of hormones.)

The fact of the matter is that Zee’s drugs have been flagged by regulators time and time again. The reason for each failed test has varied: some drugs contained the wrong amount of key ingredients, some contained ingredients that weren’t supposed to be there. And in some cases the potential consequences could have been catastrophic.

In March 2023 regulators tested a steroid injection from a hospital pharmacy in Maharashtra state. The medicine – used to treat rheumatic disorder, asthma and severe allergic reactions – was found to be contaminated by microbes. This type of impurity, known as a sterility failure, can be deadly.

A few months later, authorities from a neighbouring state, Karnataka, tested a sample of over-the-counter eye drops made by Zee Labs. Again, they failed a sterility test. Eye drops contaminated in this way can cause blindness and even be lethal.

In May last year, regulators in Kolkata tested a batch of a Zee-made antibiotic called ceftriaxone. Once more, the results were serious. In this case the drug failed four separate tests, again including one for sterility.

These contamination problems should all have been picked up during safety checks made before the drugs leave the factory. Mukul told us that all batches are tested at multiple stages of manufacture before being released to the market and that every failed quality test is investigated internally by Zee Labs staff. But when we asked him and the company about the outcome of investigations into specific instances of microbial contamination, they did not respond.

Zee Labs told us it “firmly rejects any suggestion that it knowingly manufactures substandard medicines” and it “does not release any batch for sale without following the prescribed procedures”.

‘Lives are in danger’

Each of the above drugs – and indeed all 86 of the drugs that failed tests – had already left the factories and samples were often taken from pharmacy shelves. However, it remains unclear how they affected people who might have been given them. The Indian Pharmacopoeia Commission (IPC), to whom doctors and patients can report adverse events, refused to tell us if any such data had been collected, citing a law that justified the denial of data because of a “fiduciary relationship” unless public interest warrants it. It is unclear who it supposedly owed this fiduciary duty to, or why public interest didn’t warrant the disclosure.

Ganadhish Kamat, former global head of quality at Dr Reddy’s Laboratories, one of India’s largest pharmaceutical companies, voiced his frustration with this lack of transparency. “The public’s life is in danger,” he said. “They should publish [this information] openly.”

The IPC did not reply when contacted for comment.

Mukul told us he didn’t know the details of each specific failed test but he downplayed their seriousness, saying they reflected only a tiny proportion of the medicine batches made by his company each year. He said the failures that did occur – including for sterility – were likely to be due to factors outside of his company’s remit, such as drugs being kept in hot and humid conditions after leaving the plant.

“I don’t run the pharmacies of the country, I don’t run transportation in the country,” he said. “There will be things that are beyond my control. These are chemical substances.”

Kamat, the drugs quality expert, said that while storing some drugs in hot conditions can degrade their active ingredients, it would not explain issues such as bacterial contamination. In all, at least 41 of the 86 failures fell into categories that Kamat said were either unlikely or impossible to have been caused by storage, and were more likely linked to poor manufacturer practices.

He also said that drug companies often have internal testing programmes to detect the degradation of products in response to heat and humidity. As a result, he said, the most quality-conscious companies would have few or no bad drugs found by regulators.

Zee Labs said “a high number of regulatory alerts is a serious matter and we treat it as such [but] they do not establish deliberate wrongdoing by the manufacturer”. The company said that in each instance, it has the opportunity to appeal, have the drugs retested and argue its case if it goes to court.

No consequences

Despite so much evidence showing Zee Labs has manufactured substandard drugs – an offence that still carries a possible prison sentence despite a recent loosening of the rules – Indian regulators have struggled to successfully prosecute the company.

We sought data on attempted prosecutions of Zee Labs under the Drugs and Cosmetics Act from four regulators: the CDSCO, plus the local bodies for Kerala, Karnataka and Himachal Pradesh. In total, they have launched at least 42 prosecutions against the company since 2015, most of which were for allegedly making poor-quality drugs. None of these cases have resulted in convictions, with most still ongoing and at least one quashed by a higher court.

Notably, not a single prosecution had been attempted by the regulator for Himachal Pradesh, the state where two Zee Labs factories are based and nearly all its failed drugs have been made. This is the same agency that issues manufacturing licences to the two factories, and is part of a department that reports directly to the state government – which offers financial incentives to the local pharma industry. (The Kerala state regulator, by comparison, launched 21 prosecutions in the same timeframe.)

Part of this inaction can be explained by government guidelines that discourage regulators from prosecuting a company for a substandard drug unless they can establish criminal intent or gross negligence, or the quality failure is deemed serious enough. Sunny Kaushal, an assistant drugs controller in Himachal, said that these guidelines meant the local regulator didn’t prosecute every case.

When substandard drugs made in a Himachal plant are sold elsewhere, or when the failure of a drug sold in the state was deemed minor, he explained, the regulator is only able to take “administrative action”. Such actions include suspension of the plant’s licence to make the drug in question, sometimes for as little as a few weeks. Kamat, the quality control expert, said such small penalties barely impacted revenues or deterred manufacturers.

But there are other barriers to regulators prosecuting successfully. Shri Singh, a criminal lawyer who has fought cases under India’s drugs laws, said drug inspectors do not have training or resources to build the kind of strong criminal cases required to convict manufacturers under Indian law.

In one 2014 case, the regulator failed to provide evidence that the drug in question had been stored at the right temperature. In another case, the judge ruled that the inspector failed to give Zee Labs its legal right to retest its substandard drug, and in another, the inspector failed to file a case to the supreme court within the legally given deadline. All three cases ended with the company being acquitted.

Then there is the fact that India’s archaic legal infrastructure makes serving summons difficult. The accused often don’t turn up in court, claiming they haven’t received summons, said Manish Chaudhary, a former inspector who filed a case against Zee Labs in 2024.

Those at the top can be most difficult to hold to account. As the managing director of Zee Labs, Rohit’s father, Rajeev, was named as co-accused in some of the legal cases against the company. In at least two instances, his lawyers argued that he was unaware of the firm’s day-to-day affairs and couldn’t be held criminally liable for substandard drugs – an argument the courts accepted both times.

Neither the CDSCO nor the regulator for Himachal Pradesh responded to our requests for comment.

Continuing to spiral

Plançon, the former Interpol safety worker, cited “political and economical blindness” for the failure to address the issues at the heart of India’s drugs industry, which she described as too big to fail. She also warns that the situation will further deteriorate: “It’s a tsunami that will come on to us, and we will wake up and say, ‘Why didn’t we do anything to prevent it?’”

Meanwhile, the issues at Zee Labs show no sign of stopping. If anything, its record is getting worse: over the course of this year, Indian regulators have put out an alert about its drugs almost once every three weeks. Yet its medicines continue to make their way to hospital shelves around the world.

But the company is one part of a far bigger picture. The problems lie not just with the companies manufacturing bad drugs but the legal and regulatory systems overseeing them. Until safety standards are properly enforced, patients will continue to get sicker – and some will die needlessly. As Mukul himself told us: “Quality is always black and white, right? It has to be.”