NSD Bio Group, LLC 

Potential Health & Safety Impacts from 

Pharmaceuticals and Supplements Containing 

Chinese-Sourced Raw Ingredients 

Prepared for 

U.S. China Economic and Security Review Commission 

NSD Bio Group, LLC 

April 2010 
NSD Bio Group, LLC 

Preface 

__________________________________________________________ 

In recent years there has been increasingly deep concern regarding the potential health and public safety 

impacts of the widespread and unregulated use of Chinese-sourced ingredients that are imported and 

incorporated into America’s pharmaceutical products, dietary, and nutritional supplements. Issues driving 

interest in these areas are numerous and varied. 

Against the backdrop of past health and safety concerns caused by tainted, or otherwise unsafe raw 

materials discovered in imported products from China – to include, among others, heparin (a blood 

thinner widely used by kidney-dialysis and post-surgical patients to prevent blood clots), and wheat gluten 

(corrupted with the chemical melamine) – this report will address concerns relating to potential threats to 

consumer health, and whether appropriate American regulatory agencies, particularly the U.S. Food and 

Drug Administration, and the Department of Health and Human Services have the appropriate resources, 

policies, and procedures required to respond adequately and effectively. 

This report attempts to shed light and insight on particular issues addressing potential implications of a 

critical component of a complex supply chain, which contributes to U.S. national health security as China 

continues to strengthen its position as the world’s largest supply source of raw materials for 

pharmaceuticals and supplements. As first reported in 1998 by the U.S. Government Accounting Office, 

the U.S. imports an estimated 80% of the raw ingredients contained in both products manufactured, sold 

and consumed in this country. In light of recent passionate debate on unprecedented major reform of the 

U.S. national health care system during the time of this report, one fundamental remains – extreme 

confidence in the quality, safety and effectiveness of the medicines used is essential for any 

improvements (either incrementally or substantial) of the nation’s health security, and cannot and should 

not be compromised to any degree. Analyses contained in this report reflect past and continuing trends of 

expected outcomes of U.S. corporate strategies based on competitive cost pricing, increased margins, 

and market growth drivers. 

The U.S. China Economic and Security Review Commission (Commission) has requested NSD Bio 

Group, LLC to prepare an objective, independent report addressing potential health and safety impacts of 

Chinese-sourced ingredients used in the production and supply of pharmaceutical products, dietary and 

nutritional supplements to the US marketplace. 

This report both draws reference from and adds to specific papers, reports, public hearings, and 

testimonies to Congress – and in particular, the House Committee on Energy and Commerce and 

the Commission on this and other import-related matters – as part of the ongoing public debate on 

U.S. – China trade and product safety issues. 
NSD Bio Group, LLC 

Executive Summary 

Against the backdrop of recent health and safety concerns caused by tainted, or otherwise unsafe raw 

materials discovered in imported products from China, this report attempts to address similar concerns on 

the potential array of health risks to American consumers from imports of specific raw materials supplied 

by China used in the U.S. manufacture of pharmaceutical and supplement products. It is well documented 

that China is a major producer and exporter of FDA-regulated products and therefore presents a range of 

issues for concern. As evidenced in many past instances, the FDA has encountered compliance 

problems with other imported items from China, such as cough syrup, toothpaste (contaminated with 

diethylene glycol – a poisonous ingredient used in antifreeze), pet food (melamine), lead and cadmium in 

ceramic ware used to store and ship food, staphylococcal contamination of canned mushrooms, and 

more recently, residential drywall and high cadmium (in place of lead) concentrations found in children’s 

jewelry, both reported by the U.S. Consumer Product Safety Commission, as documented examples. 

While improvements have been made in oversight procedures and enforcement by Chinese authorities, 

much still remains to be done to attain international standards and widespread consumer confidence. 

In spite of the widely reported tainted heparin-associated incidents of 2008, the U.S. remains one of five 

major importers of heparin sodium, of which China exported a total of 30 tons (~27,215 kg) in the first 

quarter of 2009. China has upgraded its enforcement of production quality control measures towards 

heparin manufacturers, which as the writing of this report, numbered 28 in total, with the top five 

companies responsible for over 85% of the Chinese heparin export market. Heparin and salts ranked 5th

in terms of top API products exported to the U.S. from 2006 to 2008 with an estimated value of close to 

$21 M and ~22.4K kg. From prior research, it was estimated that in the U.S. alone, two tons of heparin 

per month was required, 70% sourced from China. One immediate domestic response towards improving 

import and product safety for the much needed heparin, as part of continuing efforts on securing the 

supply chain, was a revision of heparin sodium and heparin calcium monographs for new testing and 

analyses of selected imported raw materials. 

There are relatively few regulations related to pharmaceutical exports from China in comparison to 

industrialized economies with significant global influence. In particular, the regulations on “Pharmaceutical 

Processing for Export” as currently written are brief, and could be easily interpreted as putting an 

enormous burden on the destination country or region external to China with respect to quality standards 

and safety requirements. Up until relatively recently, the Chinese government has emphasized their 

efforts on the monitoring of drug safety issues inside rather than outside of China. Therefore China’s 

State Food and Drug Administration’s (SFDA) surveillance on exported pharmaceuticals were limited due 

to financial and technical hurdles. Taking into consideration recent drug safety incidents impacting only 

the Chinese drug consumer, one can easily argue that past regulatory and enforcement efforts were 

insufficient and inadequate. 

As one of many consequences of the wide chasm between China’s regulatory and inspection system of 

pharmaceuticals and other economies’ regulatory regimes, Japan, the second largest market for 

nutritional supplements in the world behind the United States, with a market size for nutritional 

supplements and health foods over $10 B annually, has adopted rigorous measures in its import controls 

and regulatory requirements to reduce significantly the chances of tainted, counterfeit, or otherwise 

unsafe Chinese-produced ingredients in medicines and supplement products. These measures have 

been implemented in part because Japan has experienced a number of health and safety incidents 

involving imported Chinese supplements (and related raw materials) in recent years. 

The agreement between SFDA and the U.S. Department of Health and Human Services (HHS) signed in 

December 2007 was the foundation to establish a bilateral mechanism to help ensure designated 

imported products to the US meet standards for safety and effectiveness. SFDA is currently working 

toward a system that will enable it to certify that both the manufacturers and their products meet 

HHS/FDA requirements. 
NSD Bio Group, LLC 

China has evolved into the world’s largest supplier of bulk drug or APIs (Active Pharmaceutical 

Ingredients) required for pharmaceutical products and certain supplements. Despite the current 

economic downturn, this expansion will continue. China has surpassed the U.S. to become the largest 

bulk drug manufacturing and exporter in the world, and as a result, China’s raw materials impact on the 

global pharmaceutical market continues to grow. For example, China is the world’s No. 1 producer of 

Acetominophen - a widely used over-the-counter (OTC) analgesic (pain reliever) and antipyretic (fever 

reducer), commonly used for the relief of fever, headaches, and other minor aches and pains; and is a 

major ingredient in numerous cold and flu remedies such as Contac, Benadryl, Excedrin, Sudafed, 

Theraflu, and Vicks among others. China is also a major producer of Vitamin C: China produces over 

100,000 tons of Vitamin C, and exports 90% on an annual basis. From 2006 - 2008 Vitamin C was the top 

API product exported to the U.S. valued in an amount exceeding $72 M and ~21.4M kg. Acetominophen 

was the11th highest API export to the U.S. market with an estimated value of just over $12.4M and 

~3.42M kg. 

China has undoubtedly emerged as America’s No. 1 pharmaceutical trade partner, as reflected by 

China’s 16.24% share of the market for pharmaceutical ingredients imported into the United States (as of 

data for 2008). In comparison, the United States held an 11.85% share of the market for pharmaceutical 

ingredients imported into China for the same period, making the United States the 2nd largest such 

exporter, resulting in an estimated 4.39% trade imbalance. To put this in perspective, the top 5 of the 

leading 25 Chinese API Exporters to U.S. during 2006 – 2008 shipped roughly 49.1 million kilograms of 

API related products worth an estimated ~$167.9 million. Given the increased activity of outsourcing to 

China by American pharmaceutical companies of their research & development, discovery, and product 

development functions in the name of cost-benefit considerations, this trend is expected to continue. 
NSD Bio Group, LLC i 

TABLE OF CONTENTS 

Overview of China’s Bulk Drug Manufacturing Industry ...................................................................................... 1

China is the World’s Largest Bulk Supplier ................................................................................................................1

Top 25 Chinese API Exporters by Revenue ................................................................................................................4

Top 25 Chinese Pharmaceutical Manufacturers by Revenue....................................................................................5

Regulatory Agencies and Policies to Ensure Food and Drug Safety Surveillance ......................................................6

Regulatory Agencies and Responsibilities .................................................................................................................6

SFDA and Affiliated Agencies.................................................................................................................................6

Adverse Drug Reaction Monitoring System...........................................................................................................8

Drug Control Institutes ........................................................................................................................................11

Chinese Pharmacopoeia ......................................................................................................................................11

Regulatory Policies ..................................................................................................................................................12

Drug Administration Law.....................................................................................................................................12

Counterfeit Drug and Substandard Drug.............................................................................................................12

Pharmaceutical Exports Regulations ...................................................................................................................13

China‐U.S. Agreement to Strengthen Drug Safety of Chinese Exports................................................................14

Recent Efforts to Enhance Drug Safety................................................................................................................14

U.S. is China’s No. 1 Pharmaceutical Trade Partner............................................................................................16

Trends of Raw Material Exports from China to U.S. ................................................................................................16

DMF Filing of Chinese Raw Materials ......................................................................................................................18

Major Chinese API Exports to U.S............................................................................................................................20

U.S. Market Penetration by Chinese‐Sourced Ingredients ......................................................................................21

Major Chinese API Exporters/Manufacturers to U.S...............................................................................................25

Zhejiang Medicine Co., Ltd. .................................................................................................................................26

Zhejiang NHU Co., Ltd..........................................................................................................................................27

Northeast Pharmaceutical General Factory (NPGF) ............................................................................................29

Shandong Xinhua Pharmaceutical Co., Ltd..........................................................................................................30

Zhejiang Hisun Pharmaceutical Co., Ltd. .............................................................................................................32

Recent Case Studies of Drug Safety Incidents.....................................................................................................35

Xinfu Clindamycin Injections (2006) ....................................................................................................................35

Qiqihar Counterfeit Armillarisin A Injections (2006) ...........................................................................................37

Shanghai Hualian Major Drug Production Quality Accident (2007) ....................................................................39

Dalian Jingang‐Andi Counterfeit Rabies Vaccines (2009) ....................................................................................40

Other Examples of Tainted, Unsafe Drug Distribution and Use ..........................................................................40

Brief Overview of Australian Regulatory System................................................................................................41

GMP Clearance Process for Overseas Manufacturers.............................................................................................41

Active Pharmaceutical Ingredients (API) .................................................................................................................42

Australian Quarantine and Inspection Service (AQIS), Department of Agriculture, Fisheries and Forestry ...........42

Regulatory framework for medicines in Australia...................................................................................................44

Adverse drug reaction reporting .............................................................................................................................44

Brief Overview of Japanese Regulatory System .................................................................................................45

Master File System for Drug Substances .................................................................................................................45

Candidates for MF Registration...............................................................................................................................45

GMP Compliance Inspection concerning Pharmaceuticals (including API) of Foreign Manufacturers (Overview

Guidance for Foreign Manufacturers) .....................................................................................................................46
NSD Bio Group, LLC ii 

Drug Safety Surveillance in Canada ...................................................................................................................48

Drug Regulation in Canada ......................................................................................................................................48

Drug Safety Concerns in Canada..............................................................................................................................52

Chinese Pharmaceutical Exports to Canada ............................................................................................................52

Brief Overview of U.S. Drug Regulatory Systems................................................................................................53

Pharmaceuticals ......................................................................................................................................................53

Prior Acknowledged Warnings ................................................................................................................................54

Dietary Supplements ...............................................................................................................................................57

China Effect..............................................................................................................................................................62

Final Considerations and Recommendations .....................................................................................................63
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Overview of China’s Bulk Drug Manufacturing Industry 

China is the World’s Largest Bulk Supplier 

China’s bulk drug or API (Active Pharmaceutical Ingredient) industry has been the backbone of the 

country’s healthcare industry for many decades. With over 20% annual growth, China’s bulk drug industry 

continued to expand at a fast pace in 2008, despite the worldwide economic downturn. 

According to the recent statistics data released by the China Chamber of Commerce for Import & Export 

of Medicines & Health Products (CCCMHPIE) in April 2009,

1

 China has surpassed the United States and 

has become the largest bulk drug manufacturing and exporting country in the world. In 2008, China’s bulk 

drug sales revenue reached 175.6 B RMB ($25.67 B), a 22.6% year-over-year increase. The country’s 

bulk drug exports stood at $17.58 B, a 29.59% growth over the previous year. 

China’s bulk drug exports have grown by 20% annually since 2001. According to National Bureau of 

Statistics of China, China produced a total of 2.08 million tons of raw materials for drugs in 2007. 2

 For 

many years, China has been exporting more than half of its bulk drug products to nearly 200 countries or 

regions across Europe, North America and Asia. As a result, China-sourced raw ingredients have a 

growing impact on the global pharmaceutical market. 

Official statistics reported that China is now able to produce over 1,500 bulk drugs.3

 

Notable achievements of China’s API exports are summarized below: 

• China is the world’s No. 1 manufacturer of penicillin salts, Vitamin C and Acetaminophen. 

• China-produced antibiotics, vitamins, hormones, antipyretic analgesics, amino acids, and alkaloids 

have secured a considerable market share on the global market. 

• China-developed artemisinin products have been widely used across the globe to fight against 

malarial disease. 

However, it is acknowledged that China still lags significantly behind in innovative drug development, 

compared with developed or other developing countries such as U.S. and India. So far, only two Chinadeveloped bulk drug exports, Artemisinin and Sodium Dimercaptosucinate, are recognized as innovative 

drugs by the international community. 4

 In 2006 it was reported that 95% of China-produced 

pharmaceutical products were non-patented generic drugs, and the number of proprietary drugs 

developed thus far suggests China is still in the growth phase for innovative drug development. 5

Today, China is home to more than 4,000 Chinese GMP-certified pharmaceutical manufacturers; onefourth of them involved in API production. 1

 Chinese Contract Manufacturing Organizations (CMOs) are 

playing an increasingly important role in fueling China’s API industry. Several industry leaders such as 

 

1 CCCMHPIE. Current Status and Development Trend of China’s Pharmaceutical Raw Material Industry. Released at 

2009 International Exhibition of Pharmaceutical Raw Materials, China. Apr.17, 2009. Available at 

http://ybsh.mhpie.com.cn/cccmhpie/hydt/html/?1370.html. (in Chinese) 2

 Xiong, Jiabing. API Industry (in China) to Expand rapidly. Private Economic News. Aug. 20, 2008 (in Chinese) 3

State Council of PRC. White Paper of Drug Safety Supervision Situation in China. July 18, 2008. Available at 

http://www.sda.gov.cn/WS01/CL0027/31372.html (in Chinese) 4

 Qiu, Zhen. SWOT Analysis of API Industry in China. Chinese Journal of Pharmaceutical Technology Economics 

and Management. Vol. 2, No. 1, pp. 37-42. (in Chinese) 5

 http://www.genengnews.com/articles/chitem.aspx?aid=1875&chid=4 
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Zhejiang Medicine Co., Ltd., Zhejiang NHU Co., Ltd., Shijiazhuang Pharmaceutical Group, Northeast 

Pharmaceutical General Factory, Shandong Xihua Pharmaceutical Co., Ltd., Zhejiang Hisun 

Pharmaceutical Co., Ltd., has established a good international reputation as well as solid business 

relationships with their clients worldwide. 

Chinese manufacturers strive to improve the quality of their products in accordance with international 

standards. Chinese manufacturers have obtained 158 Certificate of Suitability (COS) certifications from 

Europe by 2008.1

 Chinese drug manufacturers have so far generated over 600 Drug Master Files 

(DMFs) from U.S. Food and Drug Administration (FDA). 

The major categories of Chinese API exports include antibiotics, vitamins, organic acids, amino acids and 

intermediates, which are displayed in two graphical representations as shown in Figures 1A, 1B.6

FIGURE 1A: CHINESE API EXPORTS COMPOSITION 2008 

3.46%

25.86%

Antibiotics

20.63%

Vitamins

17.87%

Organic Acids

12.28%

Amino Acids

6.20%

3.09%

2.92%

2.74% 1.89% 1.41%

Unclassifed & Intermediates Antibiotics Vitamins

Organic Acids Amino Acids Alcohols

Sulphonamide Antipyretic Analgesics Hormores

barbitone Alkaloids Herbal Extracts

Anti-virus

FIGURE 1B: CHINESE API EXPORTS COMPOSITION 2008 

0

0.05

0.1

0.15

0.2

0.25

0.3 Unclassifed &

Intermediates

Vitamins

Amino Acids

Sulphonamide

Hormores

Alkaloids

Anti-virus

Chinese API Exports

Composition x 100 %

 

6

 Wu, Huifang - China API Imports and Exports Analysis by Categories in 2008. Collected and analyzed May 18, 

2009. Available at www.healthoo.com for subscribed members only. (in Chinese) 
 NSD Bio Group, LLC                                                                ~  ~3

Penicillin salts: 

According to CCCMPHIE7

, China exported 9,855 tons (~$157 M) of penicillin industry salt in 

2008, with an average price of $15.97 per kilogram. However by quantity, penicillin salts exports 

decreased by 27.70% in 2008, compared with 2007. Forty percent of excess production capacity 

attributed to the decrease of penicillin exports. It is anticipated that Penicillin will be replaced by 

related downstream products such as 6-APA, amoxicillin, GCLE and ampicillin in the near future. 

China exports penicillin salts to five countries: India (84.32%), Iran, Japan, United Arab 

Emirates, and U.S. The leading penicillin producers are Huaxing, Shijiazhuang Pharma 

Zhongrun Co., Harbin Pharma Group, North China Pharma Group, Hebei Zhongrun, and Lukang 

Pharma, Sichuan Pharma. 

• Vitamin C: 

According to CCCMPHIE, as the biggest Vitamin C manufacturer in the world, China produces 

over 100,000 tons of vitamin C and exports 90% abroad each year. The average exports price 

for Vitamin C was $8-10 per kilogram in 2008, but the price has dropped in 2009. Leading Vitamin 

C manufacturers in China are Shijiazhuang Pharma, Northeast Pharma, North China Pharma, 

Aland (Jiangsu) Nutraceutical Co., Ltd.). 

• Acetaminophen: 

According to the statistics released by China Customs, China exported 42,388 tons of 

acetaminophen worth $172.28 M in 2008, an 8.68% decrease in quantity but a 23.75% increase 

in value, compared with 2007. The average price was $4.04 per kilogram. Major destinations of 

this product include Asia, Africa, Europe, and America. Anqiu Lu-an Pharma is the industry leader 

among over 100 Chinese acetaminophen producers and exporters.8

 

• Heparin 

Chinese heparin producers experienced a hard time following the fatal heparin-associated 

incidents reported in U.S. in early 2008. However, according to CCCMPHIE9

, this situation has 

changed in 2009, as Chinese authorities and heparin manufacturers are enforcing tougher quality 

control procedures in production. Heparin exports in the first quarter of 2009 increased 155% and 

34%, compared to the first quarter and the fourth quarter of 2008, respectively. The price of 

heparin also doubled (to $4,354 per kilogram) in the first quarter of 2009, compared with the 

same period of 2008. 

China exported a total of 30 tons of heparin sodium to 27 countries in the first quarter of 2009. 

The big importers of China-produced heparin are U.S., France, Germany, Austria and Italy, who 

were responsible for 86% purchase of Chinese heparin exports. 

Currently, there are 28 heparin producers/exporters in China. The following top five companies 

have dominated over 80% of Chinese heparin exports: 

o Shenzhen Hepalink Bio-Tech Co., Ltd. 

o Nanjing Jianyou Biochemical Pharmaceutical Co., Ltd. 

o Changzhou Qianhong Bio-pharma Co., Ltd. 

o Yantai Dongcheng Biochemicals Co., Ltd. 

 

7

 CCCMPHIE. Analysis of Chinese API Imports & Exports 2008. Mar. 17, 2009. 

 Available at: http://www.cccmhpie.org.cn (in Chinese) 8

 Chinese Acetaminophen Exports Facing Crisis. China Pharmaceutical News. May 4, 2009. (in Chinese) 9

 CCCMPHIE. Heparin Sodium Exports Soars in Q1 2009. May 25, 2009. Available at: http://www.cccmhpie.org.cn (in 

Chinese) 
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o Zhejiang Huilong Foreign Trade Co., Ltd. 

 Top 25 Chinese API Exporters by Revenue 

In 2008, a total of 13 Chinese exporters achieved over $100 M exporting revenue (Table 1), 

according to China Customs data. Interestingly, vitamin exporters took the lead and dominated all 

the top 6 spots in 2008.10 

TABLE 1: TOP 25 CHINESE API EXPORTERS IN 2008 

 

 

10 Wu, Huifang. 2008 Ranking of Chinese API Exporters. May 15, 2009. Available at www.healthoo.com for 

subscribed members only. (in Chinese) 

Ranking Exporters 

Amount 

(USD in 

Million) 

1 Zhejiang Medicine Co., Ltd. 292.70 

2 Zhejiang NHU Co., Ltd. 264.28 

3 Zhejiang Medicines & Health Products I/E Co., Ltd. 252.03 

4 CSPC Weisheng Pharmaceutical (Shijiazhuang) Co., Ltd. 217.68 

5 Northeast Pharmaceutical General Factory 207.49 

6 Aland (Jiangsu) Nutraceutical Co., Ltd. 186.37 

7 Sinochem Ningbo I/E Ltd. 168.60 

8 Heibei Welcome Pharmaceutical Co., Ltd. 165.27 

9 RZBC Imports & Exports Co., Ltd. 127.38 

10 Zhuhai United Laboratory Co., Ltd. 116.32 

11 Shandong Xinhua Pharmaceutical Co., Ltd. 105.69 

12 Anhui BBCA Biochemical Co., Ltd. 104.17 

13 Shandong TTCA Co., Ltd. 100.38 

14 Harbin Pharmaceutical Group 82.50 

15 Ningxia Qiyuan Pharmaceutical Co., Ltd. 64.65 

16 Shenzhen Hepalink Bio-Tech Co., Ltd 63.47 

17 Aurobindo (Datong) Biopharmaceutical Co., Ltd. 62.56 

18 CSPC Hebei Zhongrun Pharmaceutical Co., Ltd. 59.91 

19 Fujiang Fukang Pharmaceutical Co., Ltd. 59.25 

20 Zhejiang Huahai Pharmaceuticals Co., Ltd. 59.01 

21 China Meheco Corp. 55.12 

22 Zhejiang Jiuzhou Pharmaceutical Co., Ltd. 52.55 

23 Hebei Wangquan Kaidi Imports & Exports Co., Ltd. 51.99 

24 Zhejiang Hisun Pharmaceutical Co. Ltd. 50.26 

25 Hubei Guangji Pharmaceutical Co.,Ltd. 49.77 
 NSD Bio Group, LLC                                                                ~  ~5

Top 25 Chinese Pharmaceutical Manufacturers by Revenue 

According to the SFDA Southern Pharmaceutical Economic Institute, the top 25 Chinese pharmaceutical 

manufacturers in 2008 are listed in Table 2. 

TABLE 2: TOP 25 CHINESE PHARMA & HEALTHCARE MANUFACTURERS IN 2008 BY EXPORTS 

Ranking Manufacturer 

1 Harbin Pharma Group 

2 Shijiazhuang Pharma Group 

3 Shanghai Pharma Group 

4 Tianjin Pharma Group 

5 Yangtze River Pharma Group 

6 Jilin Xiouzheng Pharma Group 

7 Guangzhou Pharma Group 

8 North China Pharma Group 

9 Tianjin Jinyao Pharma Group 

10 Bayer Schering Pharma Co. 

11 China Tongrentang Group 

12 Xi’an Jassen Pharma Co. 

13 Buchang Pharma 

14 Beijing Pharma Group 

15 Northeast China Pharma 

16 Zhejiang Medicine Co. 

17 Zhejiang Huadong Medicine Co. 

18 Taiji Group 

19 Qilu Pharma 

20 Shanghai Roche Pharma Co. 

21 Beijing Novartis Pharma 

22 Jiangxi JiminKexin Group 

23 Zhejiang NHU Co., Ltd. 

24 Zhejiang Hisun Pharmaceutical Co. Ltd. 

25 China National Biotec Group 
 NSD Bio Group, LLC                                                                ~  ~6

Regulatory Agencies and Policies to Ensure Food and Drug Safety Surveillance 

For many years, the Chinese government has been striving to improve and implement the country’s food 

and drug safety supervision system, technical supporting system and legal system. Based on our 

research, we believe that China has established a solid infrastructure to ensure the safety of food and 

drugs, although flaws, bureaucracy, and corruptions still exist within the system. Significant progress has 

been observed since 2007, when the State Food and Drug Administration (SFDA) vowed to improve food 

and drug safety. 

However, due to financial and technical hurdles, the Chinese government agencies emphasize their focus 

on monitoring food and drug safety issues inside rather than outside China. Our research reveals that the 

SFDA’s surveillance on exported Chinese pharmaceuticals remains quite limited. 

Terminology discrepancies between China and U.S.: 

In China, drugs are defined as “a special kind of commodity used to prevent, treat and diagnose 

diseases.” They include traditional Chinese herbal medicines, small-molecular synthetic pharmaceuticals, 

crude drugs, drug formulations, antibiotics, biochemical drugs, radioactive medicines, sera, vaccines, 

blood preparations and diagnostic medicines.3 Pharmaceutical excipients and packing materials are also 

regulated as a special category of drugs by the State Food and Drug Administration (SFDA). 

Traditional Chinese herbal medicines, vitamins, calcium tablets are regulated as drugs by the SFDA in 

China. By contrast, in U.S., Chinese herbal medicines are not recognized as therapeutics, while vitamins 

are categorized as dietary supplements. 

Regulatory Agencies and Responsibilities 

SFDA and Affiliated Agencies 

SFDA is a government agency under Ministry Of Health (MOH), responsible for the supervision on the 

safety management of food, health food, drug and cosmetics and is the competent authority of drug 

regulation. 

A. History and Commissioners 

In 1998, China’s State Council officially formed the State Drug Administration (SDA) on the basis of the 

former State Drug Administration Bureau under the Ministry of Health (MOH). Five years later in 2003, 

SDA was restructured to the SFDA, which was under the direct supervision of the State Council. 

In March 2008, the Ministry of Health (MOH) became the direct supervising authority of SFDA. Mr. Mingli 

Shao, the Commissioner of SFDA was appointed as one of the Vice Ministers of MOH during that time. 

Mr. Mingli Shao took his office as the Commissioner of SFDA in June 2005. Prior to that, he was the Vice 

Commissioner of SFDA 

In May 2005, the former SFDA Commissioner, Xiaoyu Zheng, was arrested in a corruption probe initiated 

by China’s nationwide “Anti-Commercial Bribery Campaign”. He was later convicted of taking bribes and 

dereliction of duty and sentenced to death in July 2007. Zheng's execution marks the first time China has 

imposed a death sentence on an official of his rank since 2000. 

Zheng had been the head of the SFDA from 1998 to 2005. His corrupt practices are believed to have led 

to many deaths associated with substandard or counterfeit drugs or drug ingredients at home and abroad. 

Zheng had been convicted of personally approving unproven and unsafe medicines after taking bribes 

from eight pharmaceutical companies totaling more than 6.49 M RMB ($850,000), which resulted in at 

least a hundred patient deaths (directly and indirectly) in China. It was also discovered during his eight 
 NSD Bio Group, LLC                                                                ~  ~7

year reign as the head of SFDA, Zheng personally ordered the approvals of more than 150,000 new 

medicines, an average of an astonishing 134 times that of U.S. FDA, which only approves 140 or so new 

medicines annually. Most of those 150,000 medicines approved, were products of the eight 

pharmaceutical companies that bribed Zheng, and a single unsafe medication of Anhui Hua Yuan 

Biopharmaceutical Co. 

B. Organization 

SFDA supervises nearly 2,700 food and drug administration agencies at various levels, which include 31 

provincial-level agencies (Provinces also include autonomous regions and municipalities directly under 

the Central Government), 339 city-level agencies, and over 2300 county-level agencies. SFDA also 

oversees 1,000 affiliated organizations across China. 

SFDA employs a total of over 46,000 people across China. The agency had 14,384 inspectors (including 

28 GLP Inspectors, 315 GCP Inspectors, 2,640 GMP Inspectors, and 11,401 GSP Inspectors) by the end 

of 2007.11 

SFDA has established the following major state-level drug safety monitoring agencies: 

• National Institute for Control of Pharmaceutical and Biological Products (http://www.nicpbp.org.cn) 

• Chinese Pharmacopoeia Commission (http://www.chp.org.cn) 

• Center for Drug Evaluation (http://www.cde.org.cn) 

• Drugs Certification Center (http://www.ccd.org.cn) 

• Center for Health Food Evaluation, also known as National Traditional Chinese Medicine Protection 

and Evaluation Commission (http://www.zybh.gov.cn) 

• Center for Drug Reevaluation & National Center for Adverse Drug Reaction Monitoring 

(http://www.cdr.gov.cn) 

• Center of Medical Device Evaluation, SFDA 

C. Responsibilities 

1. To organize relevant authorities to draft laws and regulations on the safety management of food, health 

food and cosmetics; organize relevant authorities to formulate comprehensive supervision policy, work 

plan and supervise its implementation. 

2. To exercise comprehensive supervision on the safety management of food, health food and cosmetics 

in accordance with laws; organize and coordinate supervision work on safety of food, health food and 

cosmetics carried out by relevant authorities. 

3. To organize and carry out investigations and impose punishment on serious safety accidents of food, 

health food and cosmetics; as delegated by the State Council, to organize, coordinate and conduct 

specific law-enforcement campaigns over safety of food, health food and cosmetics nationwide; organize, 

coordinate and collaborate with relevant authorities in carrying out emergency rescue work on serious 

safety accidents of food, health food and cosmetics. 

4. To comprehensively coordinate the testing and evaluation for the safety of food, health food and 

cosmetics; formulate provisions on releasing of supervision information for safety of food, health food and 

cosmetics in conjunction with relevant authorities and monitor their implementation; disseminate safety 

information of food, health food and cosmetics from relevant authorities and release it to the public 

regularly. 

5. To draft law and administrative regulations on drug administration and supervise their enforcement; 

carry out protection system for certain traditional Chinese medicinal preparations and administrative 

protection system for pharmaceuticals in accordance with law or regulations. 

 

11 SFDA Annual Statistic Report 2007. Sep. 17, 2008. Available at URL: 

http://www.sda.gov.cn/WS01/CL0108/32801.html (in Chinese) 
 NSD Bio Group, LLC                                                                ~  ~8

6. To draft law and regulations on administration of medical devices and supervise their enforcement; 

take charge of registration and regulation of medical devices; draft relevant national standards, draw up 

and revise professional standards of medical devices, manufacturing practice and supervise their 

implementation. 

7. To be in charge of drug registration; generate, revise and promulgate national standard of drugs; draw 

up criteria for marketing authorization of health food; review and approve health food; set up classification 

system for prescription drugs and OTC drugs; establish and improve ADR monitoring system; be 

responsible for drug reevaluation, review drugs to be withdrawn and formulate national essential 

medicines list. 

8. To draft and revise good practices for drug research, manufacturing, distribution and use, and 

supervise their implementation. 

9. To control the quality of drugs and medical devices in manufacturers, distributors and medical 

institutions; release national quality bulletin on drugs and medical devices on a regular basis; investigate 

and punish illegal activities of producing and selling counterfeit and substandard drugs and medical 

devices in accordance with law. 

10. To regulate radioactive pharmaceuticals, narcotics, toxics, psychotropics, and other controlled drugs 

and devices in accordance with law. 

11. To draw up and improve qualification system for licensed pharmacist; supervise and direct the 

registration of licensed pharmacist. 

12. To direct national drug regulation and comprehensive supervision on the safety management of food, 

health food and cosmetics. 

13. To carry out exchanges and cooperation in drug regulation, relevant safety management of food, 

health food and cosmetics with foreign governments and international organizations. 

Adverse Drug Reaction Monitoring System 

China’s National Center for Adverse Drug Reaction (ADR) Monitoring was established in 1989. In 1998, 

China officially joined the WHO Collaborating Centre for International Drug Monitoring. In November 

1999, SFDA issued a trial version of “Regulations on Adverse Drug Reaction Reporting and Monitoring”, 

which was revised and finalized in March 2004. 

To date, China has established a three-level (as shown in Chart 1) adverse drug reaction (ADR) reporting 

and monitoring network. 34 provincial-level ADR monitoring centers (including all provincial ADR centers, 

a national military hospital ADR center, and Xinjiang Construction Military Troop ADR center), have been 

established. Under provincial ADR centers, over 200 local ADR monitoring centers or stations have been 

founded. A nationwide electronic and on-line instant ADR reporting information network has also been 

formed. 

Procedurally, the formal Chinese monitoring system requires pharmaceutical industry and healthcare 

professionals to report most ADR reports quarterly. However, new, uncommon, serious or group ADRs 

are required to be reported within a shorter period. Reports will be made to local centers, which then 

analyze and transmit them to a national ADR center operated by SFDA. The national authority is then 

empowered to authorize further studies, publish formal warning announcements or prohibit use of a 

product.12

 

12 Zhou, Y. et. al. An Overview of Adverse Drug Reaction Monitoring in China. Int J Pharm Med 2006; 20(2): 79-85 
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CHART 1: ADR REPORTING SYSTEM IN CHINA 

Total ADR reports in China have been increased year over year (Chart 2) and reached 602,000 in 2008, 

which is equivalent to 460 ADR reports per one million of population. This figure is very close to that of 

developed countries. 

CHART 2: NUMBER OF ADR REPORTS IN CHINA13

17,000

4,027 4,708 7,718

36,852 70,050

173,000

369,000

547,000

602,000

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

1989-

1999

2000 2001 2002 2003 2004 2005 2006 2007 2008

Number of ADRs

A comparison of ADR reports the SFDA received, with the number of ADE (Adverse Drug Event) reports 

received by the U.S. FDA, accounting for China’s population (4.33 times of U.S.), it is positioned that the 

FDA received considerably more ADE reports than China per annum. 

 

13 Source: SFDA publicly released information. 
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CHART 3: NUMBER OF ADE REPORTS IN U.S. 14

Noticeably, among the 602,000 ADR reports in 2008, 85.7% were from hospitals, 10.4% from drug 

manufacturers or distributors, and 3.8% from individual patients.15 The percentage of ADR reports 

generated voluntarily by drug manufacturers is considerably low, compared with U.S. and other 

industrialized countries. In an effort to encourage and enforce Chinese drug manufacturers to report ADR 

cases voluntarily, SFDA announced on November 6, 2008 that it is considering amending the 2004 

version of ADR Reporting and Monitoring Regulations, which shall emphasize the responsibilities and 

liabilities for drug manufacturers to voluntarily report adverse drug events. 

• Center for Drug Reevaluation, SFDA 

Responsibilities: 

a. Draft, issue and revise the “National Basic Drug Directory” 

b. Draft, issue and revise the “National Over-the-counter (OTC) Drug Directory” 

c. Drug re-evaluation and elimination. 

d. Provide technical advice to the National ADR Monitoring Center 

• National Center for ADR Monitoring 

Responsibilities: 

a. Perform nationwide ADR monitoring 

b. Collect, evaluate, provide feedbacks, and report ADR cases 

c. Organize research on ADR monitoring methods 

 

14http://www.fda.gov/Drugs/GuidanceComplianceRegulatoryInformation/Surveillance/AdverseDrugEffects/ucm070434

.htm 

15 Source: National Center for ADR Monitoring. Jan. 20, 2009. 
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d. Build and maintain national ADR information database 

e. Provide technical advice to provincial-level ADR monitoring centers 

f. Release ADR Information Bulletins 

g. Publish ADR information journals (such as Chinese Journal of Pharmacovigilance) 

h. Participate in international ADR information exchange 

• ADR Information Bulletins 

Since the first issue of “ADR Bulletin” was issued in November 2001, SFDA has released a total 

of 22 issues of ADR Bulletins by June 2009, which are associated with ADRs of 50 

pharmaceutical products in China, -- mostly antibiotics, anti-virus agents, and traditional Chinese 

herbal medicines (TCMs). Among them, the 15th Issue of ADR Bulletin only listed internationally 

reported ADRs outside China. 

Drug Control Institutes 

Under the supervision of SFDA, there is one national-level and 33 provincial-level drug (quality) control 

institutes performing lab-based analysis and quality control of pharmaceutical products in China. Some 

provincial-level institutes (see Table 3) are designated as “Port Drug Control Institutes”, which are 

authorized to perform analyses on, and registration of imported drugs. Chinese exported pharmaceutical 

products (raw material drugs and finished drugs) must pass examination of provincial drug control 

institutes, and meet the requirements of the foreign clients accordingly. 

TABLE 3: PORT DRUG CONTROL INSTITUTES IN CHINA 

National Institute for Control of Pharmaceutical and Biological Products (NICPBP)

Beijing Institute for Drug Control Dalian Institute for Drug Control 

Tianjin Institute for Drug Control Jiangsu Institute for Drug Control 

Shanghai Institute for Drug Control Fujian Institute for Drug Control 

Zhejiang Institute for Drug Control Qingdao Institute for Drug Control 

Xiamen Institute for Drug Control Guangdong Institute for Drug Control 

Wuhan Institute for Drug Control Chongqing Institute for Drug Control 

Hainan Institute for Drug Control Shanxi Institute for Drug Control 

Chengdu Institute for Drug Control Guangxi Institute for Drug Control 

In July 2009 the National Center for Drug Safety Evaluation and Monitoring affiliated to NICPBP, received 

a one-week Good Laboratory Practice (GLP) inspection conducted by U.S. FDA and received positive 

feedback from FDA. 

Chinese Pharmacopoeia 

Pharmacopoeia of PRC (Chinese Pharmacopoeia) is a legal document that lists drug quality standards 

for all specification of drugs that have been approved in China. The first edition of Chinese 

Pharmacopoeia was published by MOH in 1953. Since then, a total of eight editions of Chinese 

Pharmacopoeia have been published (1953 Edition, 1963 Edition, 1977 Edition, 1985 Edition, 1990 

Edition, 1995 Edition, 2000 Edition, 2005 Edition). Since the 1985 Edition, Chinese Pharmacopoeia has 

been available in two languages: both Chinese and English. 

The 2005 edition of Chinese Pharmacopoeia consists of three volumes, including 3,214 monographs of 

drugs. 

• Volume I contains monographs of Chinese materials extract, Chinese traditional patent medicines, 

single ingredient of Chinese crude drug preparations etc.; 
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• Volume II contains monographs of chemical drugs, antibiotics, biochemical preparations, 

radiopharmaceuticals and pharmaceutical excipients; 

• Volume III contains information on biological products. 

The Chinese Pharmacopoeia Commission has started to prepare for the Ninth Edition, or the 2010 

Edition of Chinese Pharmacopoeia since December 2007, which is scheduled to complete by October 

2010. The new pharmacopoeia is anticipated to particularly raise the quality standards of TCMs, and 

emphasize the controllability and safety of some high-risk drug products, such as biological preparations 

and vaccines. The new pharmacopoeia will also collect quality standards of a greater number of 

pharmaceutical excipients. 

Regulatory Policies 

Drug Administration Law 

In September 1984, China’s National People’s Congress (NPC) officially approved the country’s first 

“Drug Administration Law”, which for the first time in China’s history, stipulated the legal liabilities and 

responsibilities involved in pharmaceutical research, production and distribution. The Law also specified 

the legal liabilities and responsibilities of producing or selling counterfeit or substandard drugs. 

In February 2001, NPC amended the Drug Administration Law, which increased the legal liabilities of 

producing or selling counterfeit or substandard drugs, and raised the standards of Good Manufacturing 

Practice (GMP) and Good Supply Practice (GSP). The Central Government further released a detailed 

“Regulations for Implementation of the Drug Administration Law” in August 2002 to enforce the Law. The 

full content of both the Law and its implementation regulations is available at the SFDA’s English website: 

http://eng.sfda.gov.cn/eng. 

These laws and regulations provide legal guidelines to strengthen drug administration, ensure drug 

quality and safety, and protect Chinese citizens’ legitimate rights and interests when using 

pharmaceutical products. 

Counterfeit Drug and Substandard Drug 

According to Articles 48 and 49 of the Drug Administrative Law, production and distribution of counterfeit 

and substandard drugs are prohibited. 

• Counterfeit drug is defined as, “A drug is a counterfeit drug in any of the following cases”: 

(1) the ingredients in the drug are different from those specified by the national drug standards; or 

(2) a non-drug substance is simulated as a drug or one drug is simulated as another 

The Law also specified that “A drug shall be treated as a counterfeit drug in any of the following 

cases:” 

(1) its use is prohibited by the regulations of the drug regulatory department under the State Council; 

(2) it is produced or imported without approval, or marketed without being tested, as required by this 

Law; 

(3) it is deteriorated; 

(4) it is contaminated; 

(5) it is produced by using drug substances without approval number as required by this Law; or 

(6) the indications or functions indicated are beyond the specified scope. 

• Substandard drug is defined, as “A drug with content not up to the national drug standards is a 

substandard drug. 

The Law further specified that: “A drug shall be treated as a substandard drug in any of the following 

cases”: 

(1) date of expiration is not indicated or is altered; 
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(2) batch number is not indicated or is altered; 

(3) it is beyond the date of expiration; 

(4) no approval is obtained for the immediate packaging material or container; 

(5) colorants, preservatives, spices, flavorings or other excipients are added without authorization; or 

(6) other cases where the drug standard are non conforming 

Pharmaceutical Exports Regulations 

Based on our research, there are relatively few regulations related to pharmaceutical exports from China. 

I. Drug Administration Law (hereinafter refers to the Law):

In Article 44, the Law stipulates that “The State Council shall have the power to restrict or prohibit the 

exportation of drugs which are in short supply within the country.”

In Article 45, the Law stipulates that “Anyone who wishes to import or export narcotic drugs and 

psychotropic substances that fall within the scope specified by the State shall produce the Import License 

or Export License issued by the drug regulatory department under the State Council.”

II. Regulations on Pharmaceutical Processing for Export (trial version): released by SFDA on July 29, 

2003 

This brief Regulation contains 10 articles. It defines “Pharmaceutical Processing for Export” as “Pursuant 

to the laws, a domestic pharmaceutical manufacturer is entrusted by an overseas pharmaceutical 

company to produce or package pharmaceutical products, and export all these products to a designated 

country or region (outside China), by using domestic or imported crude drug substances, excipients, 

packing materials and using the formulations, production procedures, quality standards and packing 

labels provided by the overseas company.”

In Article 3, the Regulation specifies that “The Pharmaceutical Processing for Export Contract signed by 

both parties shall comply with the Chinese laws and regulations, and shall not violate any other human 

being’s rights and interests. The entrusted (Chinese) manufacturer shall strictly follow the production 

procedures and quality standards as stipulated in the contract. The (overseas) entrust party shall take full 

responsibility for the product quality.” 

In Article 4 and 5, the Regulation requires the Chinese pharmaceutical manufacturer to submit an 

application to a provincial-level food and drug administration agency with necessary documentation. The 

corresponding provincial-level drug administration agency shall inspect the application and issue an 

official approval if the application meets all requirements. 

Finally, in Article 10, the Regulation excludes any biological products for disease prevention purposes 

(e.g. vaccines) from such kind of cross-border contract production. 
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China-U.S. Agreement to Strengthen Drug Safety of Chinese Exports 

In December 2007, SFDA and the U.S. Department of Health and Human Services (HHS) signed a 

Memorandum of Agreement (MOA) to enhance the safety of drugs, excipients and medical devices 

exported to the U.S. from China. The MOA was signed in Beijing by HHS Secretary Mike Leavitt and 

SFDA Commissioner Mingli Shao, and remains valid until 2012. 

Under the MOA, China and the U.S. are establishing a bilateral mechanism to help ensure some 

designated imported products to meet standards for safety and effectiveness by building quality into the 

process from the start. SFDA will require firms that manufacture certain products intended for export to 

the U.S. to register with SFDA. SFDA will also work toward a system that will enable it to certify that firms 

that manufacture products, and the products themselves, meet HHS/FDA requirements. 

The agreement covers the following designated drugs and medical devices that are manufactured in 

China for export to the U.S.:16

a. SFDA-Designated Drugs: 

i. Recombinant Human Insulin 

ii. Lysine Fat and Lysine Salt 

iii. Cefoperazone and its salts 

iv. Paclitaxel injection 

v. Penicillin and its finished dosage form 

vi. Diagnostic kit for blood screening, specifically, for HIV/AIDS and Hepatitis B & C 

b. SFDA-Designated Medical Devices: 

i. Intraocular Lenses 

ii. Cardiac pacemakers 

c. HHS/FDA-Designated Drugs: 

i. Gentamicin sulfate (Antibiotics) 

ii. Atorvastatin and its salts (Lipitor) 

iii. Sildenafil and its salts (Viagra) 

iv. Dietary supplements intended for erectile dysfunction or sexual enhancement 

v. Human Growth Hormone 

vi. Oseltamivir and its salts (Tamiflu) 

vii. Cephalosporins manufactured in facilities that also manufacture noncephalosporin drugs 

viii. Glycerin (Pharmaceutical formulation) 

d. HHS/FDA-Designated Medical Devices: 

i. Glucose test strips 

ii. Condoms 

Recent Efforts to Enhance Drug Safety 

• On October 19, 2006, China launched a nationwide drug safety technology campaign, as a result of 

several drug-related incidents in 2006, such as the Xinfu substandard drug adverse event and the 

Qiqihar No. 2 Pharma Counterfeit drug incident. SFDA, in conjunction with the Ministry of Science 

and Technology and the State Administration of Traditional Chinese Medicine, initiated the campaign, 

which focused on providing technological support for every step of the drug from manufacturing to 

patient. Other plans considered for improving drug safety overall were to improve post-marketing 

surveillance, develop monitoring and supervision of traditional Chinese medicine, implement preclinical trial safety checks, and develop standards for drug use and distribution. 

• On January 15, 2007, SFDA announced that all the medicines approved between 2002 and 2003 will 

have to undergo a re-registration and re-approval. A drug production approval is valid for 5 years. 

 

16 HHS-SFDA. Agreement between the Department of Health and Human Services of the United States of America 

and the State Food and Drug Administration of the People's Republic of China on the Safety of Drugs and Medical 

Devices. Dec. 11, 2007. Available at: http://globalhealth.gov/news/agreements/ia121107a.html. 
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• On July 10, 2007, the former corruptive SFDA Commissioner, Xiaoyu Zheng, was executed. Several 

associated high-ranking SFDA officials were also placed with charges and under arrest. SFDA also 

began to re-examine all the approved drugs 

• On September 8, 2007, SFDA announced that Chinese government would invest a total of 8.8 B RMB 

($1.16 B) in the next four years to improve food and drug safety supervision facilities. The intended 

investment would be allocated to several key projects, including the following: 

o reconstruction and updating the National Institute for Control of Pharmaceutical and Biological 

Products 

o purchasing bio-test equipments for 16 port drug control institutes 

o improvement of national ADR monitoring system 

o construction of new facilities for the food and drug administration agencies in some areas 

experiencing financial difficulties. 

• On March 16, 2008, SFDA announced that since July 2006, the agency had cancelled 1,604 drug 

approvals, while 7,999 drug applications were voluntarily withdrawn by the applicants. SFDA had 

revoked 157 GMP certificates, shut down 27 pharmaceutical manufacturers, and ordered 370 

pharmaceutical manufacturers to suspend production to improve production and quality control 

systems. Meanwhile, SFDA had revoked 1,210 GSP certificates, and shut down over 6,000 

pharmaceutical distributing companies. 

• In May 2009, SFDA partnered with a dozen of Chinese government agencies to establish a jointmeeting system, in an attempt to crackdown production and distribution of counterfeit drugs both 

inside and outside China. These agencies included the Ministry of Health, Ministry of Industry and 

Information, Ministry of Public Security, Ministry of Supervision, Ministry of Finance, Ministry of 

Commerce, and China Customs. The establishment of this joint meeting initiated a one-year special 

campaign to fight against fake drugs. More regulations to fight against bogus drugs will be released in 

the future. 

• In May 26, 2009, the Supreme People’s Court of PRC and the Supreme People’s Procuratorate of 

PRC co-issued the “Explanations on several legal questions when handling criminal cases related to 

production, selling of counterfeit and substandard drug products”. These “Explanations” provides 

guidelines on the standards on how to justify the appropriate crime for production and sales of fake 

drugs, which are significant “enough to seriously endanger human health”. 
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U.S. is China’s No. 1 Pharmaceutical Trade Partner 

Trends of Raw Material Exports from China to U.S. 

Each year, U.S. pharmaceutical manufacturers import 75%-80% of the essential raw ingredients for 

production of finished drug products that supply the U.S. domestic market. China-sourced and Indiasourced bulk drugs have accounted for 40% of these imported bulk ingredients in the U.S. market.17

Among the destinations of Chinese pharmaceutical exports, U.S. has taken the lead for many years, 

followed by India, Germany, Japan, and Netherlands. These top five countries accounted for 46.4% of 

Chinese API exports in 2008. On the other hand, the top five pharmaceutical importing partners of China 

are Germany, U.S., Japan, France and Swiss. Tables 4 and 5 show raw material exports and imports 

data provided by China Customs, respectively. 

TABLE 4: China’s Pharmaceutical Raw Material Exports in 200818

Ranking Country Exports 

(Million $) Share Annual Growth 

1 U.S. 2,246.66 16.24% 48.63% 

2 India 1,672.59 12.09% 26.74% 

3 Germany 962.96 6.96% 39.06% 

4 Japan 759.93 5.49% 25.50% 

5 Netherlands 638.29 4.61% 28.99% 

6 South Korea 510.77 3.69% 20.84% 

7 Brazil 426.55 3.08% 67.02% 

8 Spain 365.53 2.64% 31.08% 

9 Italy 356.19 2.58% 28.93% 

10 Belgium 346.06 2.50% 23.89% 

11 Hong Kong 295.73 2.14% 20.81% 

12 Indonesia 278.28 2.01% 34.75% 

13 Thailand 279.20 2.02% 41.94% 

14 Israel 234.02 1.69% 57.27% 

15 France 196.03 1.42% 20.38% 

16 U.K. 197.79 1.43% 23.05% 

17 Vietnam 201.67 1.46% 33.59% 

18 Taiwan 184.13 1.33% 13.57% 

19 Singapore 191.77 1.39% 31.04% 

20 Pakistan 166.47 1.20% 22.31% 

 

17 Zhu, Yushu. FDA’s Hassle and China’s Challenge. (China) Pharmaceutical Economic News. Jan. 7, 2008 (in 

Chinese) 

18 Wu, Huifang. China Pharmaceutical Imports and Exports Summary in 2008. Collected and analyzed on May 8, 

2009. Available at www.healthoo.com for subscribed members only. (in Chinese) 
 NSD Bio Group, LLC                                                                ~  ~ 17

TABLE 5: China’s Pharmaceutical Imports in 200818

Undoubtedly, U.S. has been and will be China’s largest pharmaceutical trade partner for a long time, as 

China is aimed to become the world’s largest pharmaceutical outsourcing hub, with a focus on North 

American and European markets. Figure 2 shows Chinese API exports to U.S. in 2007 and 2008. 

FIGURE 2: 2007-2008 Chinese API exports to U.S. (Million $) 19

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 

 

19 Wu, Huifang. Analysis of Chinese API exports in 2008. Collected and analyzed on May 13, 2009. Available at 

www.healthoo.com for subscribed members only. (in Chinese) 

Ranking Country Imports 

(Million $) Share Annual Growth 

1 Germany 1,133.24 14.47% 50.31% 

2 U.S. 928.34 11.85% 17.07% 

3 Japan 780.30 9.96% 7.72% 

4 France 695.17 8.87% 50.56% 

5 Swiss 485.03 6.19% 40.59% 

6 Belgium 483.05 6.17% 68.84% 

7 U.K. 397.82 5.08% 25.39% 

8 Italy 369.36 4.72% 63.34% 

9 Ireland 312.46 3.99% 38.14% 

10 India 247.10 3.15% -6.91% 

11 Hong Kong 253.46 3.24% 17.56% 

12 South Korea 202.61 2.59% -6.41% 

13 Taiwan 215.78 2.75% 28.16% 

14 Sweden 220.92 2.82% 64.90% 

15 Denmark 189.62 2.42% 33.71% 

16 Malaysia 142.98 1.83% 24.10% 

17 Netherlands 139.10 1.78% 18.94% 

18 Spain 123.05 1.57% 54.14% 

19 Austria 72.34 0.92% 33.19% 

20 Singapore 75.21 0.96% 96.96% 
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Latest data released by CCMHPIE showed that in the first five months of 2009, Chinese API exports to 

U.S. slightly declined by 6.5%, compared to the same period of 2008. Between January and May 2009, 

China exported $946 M of API products to U.S., accounting for 14.7% of total Chinese pharmaceutical 

exports. 20 U.S. is still the number-one country of destination for Chinese API exports in 2009. 

DMF Filing of Chinese Raw Materials 

A Drug Master File (DMF) is a submission to the FDA that may be used to provide confidential detailed 

information about facilities, processes, or articles used in the manufacturing, processing, packaging, and 

storing of one or more human drugs. DMFs are typically filed for supplying bulk drugs or active 

pharmaceutical ingredient (API). There are four types of DMFs: 

 Type II: Drug Substance, Drug Substance Intermediate, and Material Used in their 

 Preparation, or Drug Product 

Type III: Packaging Material 

Type IV: Excipient, Colorant, Flavor, Essence, or Material Used in their Preparation 

Type V: Other – Sterile manufacturing plants, biotech contract 

 facilities, clinical, toxicology 

Since the early 1980s, Chinese API manufacturers have been actively seeking entrance to the U.S. 

market starting by registering DMFs with FDA. On December 31, 1980, Shanxi Pharmaceutical Industry 

Corp registered China’s first DMF for its product, meprobamate. Based on our research on the U.S. FDA 

DMF database, the number of DMFs filed by Chinese manufacturers each year exceeded 100 in the past 

three years (see Table 6). By the first quarter of 2009, the total number of active DMFs filed by Chinese 

manufacturers reached 628, which included that of 588 Type II, 31 Type III, and 9 Type IV.21 

TABLE 6: ANNUAL DMF NUMBERS FILED BY CHINESE API MANUFACTURERS 

YEAR TYPE II TYPE III TYPE IV TYPE V TOTAL 

2009 (Q1) 16 5 0 0 21 

2008 114 13 0 0 127 

2007 123 6 2 0 131 

2006 101 5 0 0 106 

2005 80 1 1 0 82 

2004 30 1 1 0 32 

 

20 CCMHPIE. China’s Pharmaceutical Imports and Exports Continues to Expand between Jan. and May 2009. 

Collected and analyzed on July 2, 2009. Available at: http://www.cccmhpie.org.cn (in Chinese) 21http://www.fda.gov/Drugs/DevelopmentApprovalProcess/FormsSubmissionRequirements/DrugMasterFilesDMFs/de

fault.htm#download 
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Table 7 lists the Chinese manufacturers with the greatest number of DMFs, as of the end of 1st quarter 

2009. 

TABLE 7: CHINESE MANFUACTURERS WITH MOST TYPE II ACTIVE DMF 

Manufacturer Number of DMFs 

Zhejiang Hisun pharmaceutical Co. Ltd. 35 

Zhejiang Huahai pharmaceutical Co. Ltd. 20 

Chemwerth Inc. 17 

ALP Pharm Beijing Co. Ltd. 16 

Tai Heng Industry Co. Ltd. 10 

Shandong New Time pharmaceutical Co. Ltd. 9 

Polymed Therapeutics Inc. 8 

Qilu Antibiotics Pharmaceutical Co. Ltd. 8 

Zhejiang Jiuzhou Pharmaceutical Co. Ltd. 8 

Chongqing Daxin Pharmaceutical Co. Ltd. 7 

Tianjin Tianyao Pharmaceuticals Co. Ltd. 7 

Chongqing Carelife Pharmaceutical Co. Ltd. 6 

Qilu Tianhe Pharmaceutical Co. Ltd. 6 

World Jiangsu Industry Co. Ltd. 6 

Zhejiang Hisoar Pharmaceutical Co. Ltd. Chuannan Branch 6 

Hubei Biocause Pharmaceutical Co. Ltd. 5 

Jiangsu Hengrui Medicine Co. Ltd. 5 

Shanghai Sunve Pharmaceutical Co. Ltd. 5 

Zhejiang Hisoar Pharmaceutical Co. Ltd. 5 

Zhejiang Supor Pharmaceuticals Co. Ltd. 5 

Anqiu Luan Pharmaceutical Co. Ltd. 4 

Axitec Co. Ltd. 4 

Changzhou Pharmaceutical Factory 4 

Chifeng Arker Pharmaceutical Technology Co. Ltd. 4 

HEC Pharm Co. 4 

Qilu Pharmaceutical Co. Ltd. 4 

Shanghai Desano Chemical Pharmaceutical Co. Ltd. 4 

Yangzhou Pharmaceutical Co. Ltd. 4 

Zhejiang Neo Dankong Pharmaceutical Co. Ltd. 4 

As of this writing, only one drug preparation product produced in China had been officially approved to 

enter the U.S. market. In June 2007, Zhejiang Huahai Pharmaceutical Co. became the first Chinese 

pharmaceutical manufacturer to receive FDA approval for a finished drug product (nevirapine). The 

company will be able to export its medicine to the U.S. after May 2012, when the U.S. patent held by 

Boehringer Ingelheim for the AIDS drug nevirapine expires.22 

 

22 ‘U.S. Opens the Door to Chinese Pills’ by Nicholas Zamiska, October 9, 2007 The Wall Street Journal 
 NSD Bio Group, LLC                                                                ~  ~ 20

By comparison, China’s big competitor, India, has held a total of 2,178 active DMFs by the end of the first 

quarter of 2009. Undoubtedly, India Pharmas have been taken the lead in DMF filings among all the 

foreign countries that seek entrance to the U.S. market. 

Major Chinese API Exports to U.S. 

After an analysis on the three-year (2006, 2007 and 2008) raw statistic data obtained from the China 

Customs, we summarized the top 50 API exports that China exported to U.S. during the period from 

January 1, 2006 to December 31, 2008. The ranking is based on exports revenue in US dollars. To 

clarify, API exports hereinafter refer to APIs, pharmaceutical intermediates and excipients. 

TABLE 8: TOP 50 API PRODUCTS EXPORTED FROM CHINA TO U.S. (2006-2008) 

Rank Exports Revenue 

(US$) 

Quantity 

(kg) 

1 Vitamin C and its derivatives 72,018,334 21,389,654 

2 Vitamin E and its derivatives 49,664,853 9,127,062 

3 Citric Acid 47,154,453 64,099,908 

4 Tetracycline derivatives and salts 27,857,861 2,551,365 

5 Heparin and salts 20,865,388 22,429 

6 Vitamin B1 and its derivatives 19,462,504 1,328,905 

7 Vitamin B6 and its derivatives 17,826,168 1,165,432 

8 Vanillin(4-Hydroxy-3-methoxybenzaldehyde) 17,692,793 1,441,946 

9 Vitamin A and its derivatives 16,469,392 1,266,660 

10 Lincomycin and derivatives and their salts 12,851,888 89,678 

11 Acetaminophen 12,405,396 3,423,406 

12 Ibuprofen 11,026,973 1,279,585 

13 Vitamin B2 and its derivatives 9,257,351 439,450 

14 Vitamin B12 and its derivatives 8,608,481 149,270 

15 Sulfadimidine 8,406,868 578,800 

16 Lysine ester and salts 8,093,258 9,061,440 

17 D or DL pantothenic acid and their derivatives 7,278,043 1,197,450 

18 6-Aaminopenicillanic acid (6-APA) 6,118,825 291,800 

19 Cortisone, hydrocortisone, etc. 6,098,617 15,318 

20 Acetosalicylic acid (Aspirin) 5,904,119 2,267,214 

21 Citric Acid salts and esters 5,871,963 6,637,592 

22 Menthol 5,838,635 344,040 

23 Gentamicin and derivatives and their salts 4,836,844 25,055 

24 Inositol 4,458,520 628,855 

25 Propylene glycol 3,572,280 1,713,866 

26 Streptomycin and derivatives and their salts 2,620,208 131,528 

27 Tetracycline salts 2,564,451 209,975 

28 β-naphthol (2-naphthol) 2,551,260 1,415,616 

29 Estrogen and progestogen 2,174,416 13,476 

30 Sulfadiazine 2,146,306 535,025 

31 Choline and salts 2,123,417 2,671,326 

32 7-aminocephalosporanic acid (7-ADCA) 1,055,233 24,975 
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33 ProVitamins 1,010,761 46,881 

34 Lecithin 844,535 185,233 

35 Sulfamethoxazole 759,322 80,125 

36 Pseudoenphedrine and salts 621,679 19,775 

37 Mannitol 486,513 234,790 

38 Erythromycin and derivatives and their salts 442,988 3,525 

39 Lysine 399,535 427,400 

40 Furazolidone 362,224 11,900 

41 Nucleic acid and salts 358,362 16,519 

42 Sorbitol 304,241 674,746 

43 Dexamethasone 220,000 500 

44 Theophylline, aminophylline and derivatives and their salts 159,280 11,325 

45 alprazolam, camazepam and their salts 158,999 56,000 

46 Ampicillin salts 158,360 7,440 

47 Amoxicillin 135,700 5,700 

48 Procaine 94,918 16,200 

49 Kanamycin and derivatives and their salts 86,044 1,461 

50 Ampicillin preparations 85,150 14,960 

U.S. Market Penetration by Chinese-Sourced Ingredients 

Many drugs are produced by genetic engineering methodologies such as recombinant DNA technology or 

liposomal drug delivery systems. Pharmaceutical preparations promoted to medical, dental professions 

are called “ethical” drugs, also known as prescription drugs. The top six classes of prescription drugs are: 

central nervous system and sense organs, cardiovascular; digestive and genitourinary; neoplasms 

(tumorigenic), endocrine and metabolic diseases; parasitic and infectious diseases, and respiratory. 

These classes of finished-form drugs commanded the highest profit margins (30% of sales was standard), 

but also demanded high R&D and marketing expenses – 15% and 20% of sales, respectively. Those 

preparations sold openly to the public are commonly described as “over-the-counter” (OTC) drugs. 

OTC drugs or non-prescription drugs are sold directly to consumers without a prescription, and in general 

had high advertising and low research expenditures, and few are relatively new products. This situation 

typifies the past and current U.S.-China interdependence relationship driven by the pursuit of U.S. 

companies to boost output while lowering production and labor expenses. This report’s research analyses 

supports prior reports and trends that the U.S. relies quite heavily on Chinese suppliers for a number of 

imports of raw ingredients used in consumer OTC healthcare treatments, though a significant degree are 

also incorporated into U.S. drug prescription formulations. 

For example, China is the global leader in the manufacturing of Acetaminophen - a widely used over-thecounter (OTC) analgesic (pain reliever) and antipyretic (fever reducer), commonly used for the relief of 

fever, headaches, and other minor aches and pains. Found in more than 100 OTC preparations, it is a 

major ingredient in numerous cold and flu remedies such as Tylenol, Contac, Benadryl, Excedrin, 

Sudafed, Theraflu; and also contained in prescribed Vicodin and Percocet (oxycodone with 

acetaminophen); Tylox capsules contains oxycodone HCL and acetaminophen; Oxycodone which is the 

primary ingredient of OxyContin, the 9th leading drug in sales for 2008 (~$2.5 Billion)23a time-release 

formula of oxycodone often compounded (or combined) with other ingredients such as acetaminophen. 

Acetaminophen was the11th highest API export to the U.S. market with an estimated value of just over 

$12.4M and ~3.42M kg in the period 2006-2008. During the period 2006 to 2008, Acetaminophen 

 

23 http://www.drugs.com, ‘Top 200 Drugs for 2008 by Sales 
 NSD Bio Group, LLC                                                                ~  ~ 22

imported from China comprised ~50.3% (as shown in Figure 4) of all imported acetaminophen in the U.S. 

market. 

Ibuprofen, the 12th leading API export to U.S. market (in revenue) is found in such products such as 

Vicoprofen, Advil (~$295.1 Million with a 14.9% market share, 2008 sales), Aleve (~$172.9 Million with a 

8.31% market share, 2008 sales), Motrin 1B (~$78.9 Million with a 3.79% market share, 2008 sales), 

among others.24 During 2006 to 2008, Ibuprofen imported from China comprised ~60.6% (as shown in 

Figure 4) of all imported ibuprofen product in the U.S. market. 

Menthol, the 22nd leading API export to U.S. market (by revenue) is found in many ordinary consumer 

products in any neighborhood supermarket or drug store, such as Listerine mouthwash, Vicks VapoRub, 

Ben-Gay, Icy Hot topical applications, throat lozenges (or cough drops) such as Cepacol, Chloraseptic, 

Halls, Ricola, and Robitussin, and other products for common aches and colds. During 2006 to 2008, 

Menthol imported from China comprised ~11.4% (as shown in Figure 4) of all imported Menthol in the 

U.S. market. 

Antibiotics a class of natural and synthetic medications used to treat bacterial of fungal infectious 

diseases, is also composed of Chinese raw materials. Tetracyclines are broad-spectrum antibiotics, which 

are protein synthesis inhibitors, which stops or slows the growth or proliferation of cells by disrupting the 

processes that lead directly to the generation of new proteins. The most commonly prescribed 

tetracycline antibiotics are: tetracycline, doxycycline, minocycline, and oxytetracycline. Tetracycline 

derivative salts was the 4th major API export from China to the U.S.(in revenue), and made ~94.1% (as 

shown in Figure 4) of all imported Tetracycline derivative salts product in the U.S. market. Ampicillin, an 

antibiotic in the penicillin group of drugs, which targets the bacterial cell wall of the microbe, is also known 

by the trade name - Omnipen, to patients. Streptomycin derivative salts are also a top export to the U.S. 

market ranked 26th (in revenue), and commonly used to treat tuberculosis and infections caused by other 

bacteria. In the period 2006 to 2008, Streptomycin derivatives and salts imported from China comprised 

~74% (as shown in Figure 4) of all imported streptomycin product in the U.S. market. Ampicillin salts 

and Ampicillin preparations are ranked 46th and 50th (in revenue) respectively of major Chinese API 

exports to the U.S. market. From 2006 to 2008, Ampicillin salts imported from China totaled roughly 

~2.4% (as shown in Figure 4) of all imported ampicillin and salts product in the U.S. market. Penicillins 

had the largest market share (35%) of top Antibiotic brands in 2008. 25 It is believed that the Penicillin 

exports will continue to increase in the future. 

For additional perspective on the degree of consumption of imported Chinese ingredients contained in 

many pharmaceutical products sold and consumed in the U.S., we selected a sample of raw materials, 

referencing import data (U.S. Census Bureau, Foreign Trade Division) of reported leading export API 

products from China during 2006 to 2008 (Table 8). 

FIGURES 3A, 3B, 3C reports the estimated percentages by weight (KG) of Total U.S. imports in each 

year, comparing import data from both India and the European Union (EU) - excluding United Kingdom, 

respectively. As India is frequently acknowledged as an emerging exporter of drug-related ingredients 

and bulk chemicals to the U.S., we believed it was appropriate to include in our estimation analyses. 

Inclusion of the EU bloc provides additional insight on importation and consumption trends of certain 

ingredients for the U.S. market in relation to China. 

 

24 Market Share Reporter – 2009, ‘Top Pain Relievers (Internal/Tablet), 2008’ 25 “Top Antibiotic Brands, 2008.” Prescription Pad – November, J.P. Morgan, November 1, 2008, p. 25 from IMS 

America; Market Share Reporter 2010. Gale 2010 
 NSD Bio Group, LLC                                                                ~  ~ 23

FIGURE 3A: Estimated percentage of U.S. market share held by API products imported from China, 

India, and the EU (out of total API imports by weight) in [2006]. 

Source: NSD Bio Group, LLC

0

10

20

30

40

50

60

70

80

90

100

Menthol

Ibuprofen

Acetominophen

Ampicillin &

salts

Streptomycin &

Derivatives,

Salts

Tetracyclines &

Derivatives,

salts

Imported API Products from China, India, EU

China

India

EU

FIGURE 3B: Estimated percentage of U.S. market share held by API products imported from China, 

India, and the EU (out of total API imports by weight) in [2007]. 

Source: NSD Bio Group, LLC

0

10

20

30

40

50

60

70

80

90

100

Menthol

Ibuprofen

Acetominophen

Ampicillin &

salts

Streptomycin &

Derivatives,

Salts

Tetracyclines &

Derivatives,

salts

Imported API Products from China, India, EU

China

India

EU
 NSD Bio Group, LLC                                                                ~  ~ 24

FIGURE 3C: Estimated percentage of U.S. market share held by API products imported from China, 

India, and the EU (out of total API imports by weight) in [2008]. 

Source: NSD Bio Group, LLC

0

10

20

30

40

50

60

70

80

90

100

Menthol

Ibuprofen

Acetominophen

Ampicillin &

salts

Streptomycin &

Derivatives,

Salts

Tetracyclines &

Derivatives,

salts

Imported API Products from China, India, EU

China

India

EU

FIGURE 4 represents China’s estimated market share by weight (KG) of selected raw ingredients 

imported by the U.S. during 2006 to 2008; Projected percentages were computed by utilizing U.S. import 

data (U.S. Census Bureau, Foreign Trade Division): 

Source: NSD Bio Group, LLC

0

10

20

30

40

50

60

70

80

90

100

Menthol

Ibuprofen

Acetominophen

Ampicillin &

salts

Streptomycin

& Derivatives,

Salts

Tetracyclines &

Derivatives,

salts

Estimated Chinese Share of U.S. Market
 NSD Bio Group, LLC                                                                ~  ~ 25

Major Chinese API Exporters/Manufacturers to U.S. 

Also based on our research on the three-year data we obtained from China Customs, we summarize the 

top 25 Chinese pharmaceutical manufacturers by exports revenue in US dollars in Table 9. 

TABLE 9: TOP 25 CHINESE API EXPORTERS/MANFUACTURERS (2006-2008) 

Company Name 

(in English and Chinese) 

Revenue 

 (US$) 

Quantity 

 (kg) 

1 Zhejiang Medicine Co., Ltd. 

浙江医药股份有限公司 

46,724,830 2,724,034 

2 Zhejiang NHU Co., Ltd. 

浙江新和成股份有限公司

44,705,259 7,237,415 

3 Northeast Pharmaceutical General Factory 

东北制药总厂

33,630,370 8,699,270 

4 Shandong Xinhua Pharmaceutical Co., Ltd. 

山东新华制药股份有限公司 

23,591,958 4,057,940 

5 Anhui BBCA Biochemical Co., Ltd. 

安徽丰原生物化学股份有限公司 

19,196,892 26,388,744 

6 CSPC Weisheng Pharmaceutical (Shijiazhuang) Co., Ltd. 

维生药业(石家庄)有限公司

18,449,897 5,748,300 

7 Aland (Jiangsu) Nutraceutical Co., Ltd. 

江苏江山制药有限公司

14,084,043 4,004,800 

8 Yixing Union Biochemical Co., Ltd. 

宜兴协联生物化学有限公司 

13,612,615 18,801,354 

10 Yantai Dongcheng Biochemicals Co., Ltd. 

烟台东诚生化有限公司

12,836,475 229,130 

11 Zhejiang Tianxin Pharmaceutical Co., Ltd. 

浙江天新医药化工有限公司 

12,688,969 871,725 

12 NCPC Heibei Welcome Pharmaceutical Co., Ltd. 

河北维尔康制药有限公司

12,151,172 3,539,525 

13 Zhejiang Shenghua Biok Biology Co.,Ltd. 

浙江升华拜克生物股份有限公司

9,679,616 928,825 

14 Hubei Guangji Pharmaceutical Co., Ltd. 

湖北广济药业股份有限公司

8,457,799 407,200 

15 Zhejiang Xinfu Pharmaceutical Co., Ltd. 

浙江鑫富生化股份有限公司

8,170,526 1,289,000 

16 Leshan Sanjiu Long March Pharmaceutical Co., Ltd. 

乐山三九长征药业股份有限公司 7,787,345 722,539 

17 Zhejiang Hisun Pharmaceutical Co., Ltd. 

浙江海正化工股份有限公司 7,496,250 1,400,000 

18 Shijiangzhuang Pharmaceutical Group I/E Co., Ltd. 

石家庄制药集团进出口贸易有限公司 7,404,666 1,124,750 

19 Zhejiang Kangle Pharmaceutical Co., Ltd. 

浙江康乐药业有限公司 7,009,581 1,895,700 

20 Zhejiang NHU I/E Co., Ltd. 

浙江新和成进出口有限公司 6,943,838 247,527 

21 Shanghai Sunve Pharmaceutical Co., Ltd. 

上海三维制药有限公司 6,621,823 259,225 

22 Ningbo Green-Health Pharmaceutical Co., Ltd. 

宁波绿之健药业有限公司 5,858,069 91,726 

23 Qianjiang Yongan Pharmaceutical Co., Ltd. 

潜江永安药业有限公司 5,831,143 2,579,575 
 NSD Bio Group, LLC                                                                ~  ~ 26

24 Shijiangzhuang Honghua Pharmaceutical Co., Ltd. 

石家庄宏华药业有限公司 5,354,931 680,000 

25 Fujian Fukang Pharmaceutical Co., Ltd. 

福建省福抗药业股份有限公司 

5,305,043 157,790 

A brief profile of 5 major Chinese API manufacturers: 

Zhejiang Medicine Co., Ltd. 

Address: 268 Dengyun Road, Gongshu District, Hangzhou, Zhejiang Province, P. R. China 310011 

Website: http://www.china-zmc.com

Overview: 

Zhejiang Medicine Co., Ltd. (ZMC) was formed in May 1997 on the basis of the former Zhejiang Xinchang 

Pharmaceutical Co., Ltd. Zhejiang Xianju Pharmaceutical Co., Ltd., and Zhejiang Medical and 

Pharmaceutical Co., Ltd. ZMC went public on the Shanghai Stock Exchange Market (stock code: 

600216) in August 1998. As of this reporting, ZMC has 2.5 B RMB of total assets, and is one of the 

leading pharmaceutical companies in China. The company ranked the 16th place by sales revenue in 

2008 among the top 100 Chinese pharma manufacturers. 

ZMC employs more than 4,000 people, and controls a few subsidiaries including Xinchang Pharma 

Factory, Vitamin C Factory, Zhejiang Medicine Trading Co.Ltd, Zhejiang Health Creation Biotech R&D 

Center. 

Revenue & Profit:

26

Total Revenue Net Profit 

Year RMB 

million 

US$ 

million 

RMB 

million 

US$ 

million 

2008 3,761.03 550.06 972.63 142.25 

2007 2,208.83 323.05 56.60 8.28 

2006 2,196.50 321.24 60.62 8.87 

Products: 

ZMC produces large scale of vitamins and antibiotics such as Vitamin E, vancomycins, etc. 85% of ZMC’s 

vitamin products are exported overseas. The API and pharma intermediates that ZMC produces and 

exports include: 

• Vitamin E, Vitamin A, Vitamin D3 oil, multi-vitamins, vitamin intermediates. 

• Teicoplanin • Vancomycin HCL lyophilized 

• Kitasamycin • Levoflfloxacin 

• Sirolimus • KF506 Tacarolimus 

• Miglitol • Valglibose 

 

26 Source: Annual Financial Reports 2006-2008 officially released by ZMC 
 NSD Bio Group, LLC                                                                ~  ~ 27

Exports to U.S.:

As the top Chinese pharma exporter, ZMC exported $46.72 M of API products to U.S. between 2006 and 

2008, including the following: 

• Vitamin E and derivatives 

• Vitamin A and derivatives 

• Other vitamins 

• Vancomycin and other antibiotics 

Quality System Certification:

• All production facilities received Chinese GMP certification 

• Vancomycin production facility passed FDA inspection in December 2007. 

• Lumefantrine facility passed Australia TGA inspection in July 2005. 

U.S. Importers: 

• E.M. Sergeant Pulp & Chemical Co., Inc. 

• AGY-ENDO Corp. (based in Canada) 

• AIDP Inc. 

International Partners: 

Novartis: ZMC signed a $25.89 M contract with Novartis in 2005 to supply Novartis lumefantrine to 

produce artemether between August 2005 and September 2006. Additionally, the two parties 

signed another $29.66 M lumefantrine contract in 2007. 

Merck: ZMC is a domestic strategic partner of Merck. 

Zhejiang NHU Co., Ltd. 

Address: No. 4 JiangBei Road, Chengguan Town, Xinchang County, Zhejiang, P. R. China 312500 

Website: http://www.cnhu.com

Overview: 

Zhejiang NHU Co., Ltd. (NHU) was founded in November 1988 based on a restructuring of the former 

Xinchang Chemical Co., Ltd. In June 2004, NHU went public on the small-to-medium-sized enterprise 

section of the Shenzhen Stock Exchange Market, under the stock code of 002001. 

By 2008, NHU had 3.72 B RMB of total assets and 3,400 employees. It controls several subsidiaries 

including Zhejiang Xindong Chemical Co., Ltd., Zhejiang NHU Imports & Exports Co., Ltd., Xinchang 

NHU Vitamin Co., Ltd., Xinchang Deli Petrochemical Equipment Co., Ltd., Zhejiang Asen Pharmaceutical 

Co., Ltd. and Anhui NHU Wannan Pharmaceutical Co., Ltd. 
 NSD Bio Group, LLC                                                                ~  ~ 28

In an effort to promote and market NHU’s products into U.S., NHU set up an affiliated company, China 

Vitamins LLC, in New Jersey, U.S., in 1998. China Vitamins LLC has been actively importing NHU’s 

products to the U.S. market since that time. 

Revenue & Profit:27 

Total Revenue Net Profit 

Year RMB 

million 

US$ 

million 

RMB 

million 

US$ 

million 

2008 3,313.96 484.67 1,374.51 201.03 

2007 1,747.88 255.63 77.07 11.27 

2006 1,589.09 232.41 28.95 4.23 

Products: 

Pharmaceutical Intermediates Bulk Pharmaceuticals 

Methylene Acetone β-thymidine 

Natural Methyheptenone Vitamin E Nicotinate 

Enynic Alcohol Vitamin E Oil (crude oil) 

Tocopherol Vitamin E Oil (fine product) 

Isophytol Vitamin A Crystallization 

Ethoxymethylenemalonic Diethyl Ester Vitamin A Oil 

Exports to U.S.:

As the No. 2 Chinese Pharma exporter, NHU exported a total of US$44.71 M worth of API products to 

U.S. between 2006 and 2008, including the following: 

• Vitamin A 

• Vitamin E 

• Linalool 

• Other quinines 

Quality System Certification:

• All production facilities received Chinese GMP certification 

• Passed ISO 9001 inspection in 1999. 

U.S. Importers: 

• ADM ALLIANCE NUTRITION OF PUERTO RICO LLC 

 

27 Source: Annual Financial Reports 2006-2008 officially released by NHC. 
 NSD Bio Group, LLC                                                                ~  ~ 29

• BERIE INC. 

• CHEMTEX USA INC. 

• CHR OLESEN CO.INC. 

Northeast Pharmaceutical General Factory (NPGF) 

Address: 37 Zhong-gong-bei Street, Tiexi District, Shenyang, Liaoning Province, P. R. China 110026 

Website: http://www.negpf.com.cn

Overview: 

Established in 1946, Northeast Pharmaceutical General Factory (NPGF) is a large-scale pharmaceutical 

manufacturer in China and one of the oldest pharmaceutical manufacturers based in Northern China. It is 

the core subsidiary of Northeast Pharmaceutical Group Co., Ltd. (NPGC), a public listed company on the 

Shenzhen Stock Exchange Market (stock code: 000597). In 2008, NPGC ranked 15th among the top 100 

Chinese pharmaceutical manufacturers. Its total assets reached 4.10 B RMB by 2008. 

NPGF specializes in producing chemical synthetic medicines and biological fermented medicines. The 

Factory employs over 6,000 people and is capable of manufacturing over 30,000 tons of bulk 

pharmaceuticals annually. 

Revenue and Profit:

28

Total Revenue Net Profit 

Year RMB 

million 

US$ 

million 

RMB 

million 

US$ 

million 

2008 4,609.77 674.19 357.91 52.38 

2007 3,706.07 542.42 47.52 6.95 

2006 1,918.24 280.75 19.63 2.87 

Products:

NPGF primarily produces both bulk and finished series products of vitamin C, phosphonomycin, 

levocarnitine, cephalosporin, sulfadiazine, berberine, and vitamin B1, among others. Besides China, the 

factory’s products have been sold to over 70 countries, generating over $150 M exporting sales annually. 

NPGF ranked first place in vitamin C exports to U.S. during 2006 and 2008. Based on the statistic data 

retrieved and analyzed from China Customs, from January 2006 to December 2008, the factory exported 

a total of 8.167 tons (worth $2.672 M) of bulk vitamin C, and 359,020 kilograms of vitamin B1 (worth $5. 

051 M) to the U.S. 

Accordingly, NPGF has the world’s largest single vitamin C production line. Sales of certain products such 

as sodium phosphonomycin, vitamin B1, sulfadiazine, and levocarnitine, ranked third on a global scale. 

Exports to U.S.: 

 

28 Source: Annual Financial Reports 2006-2008 officially released by NPGC 
 NSD Bio Group, LLC                                                                ~  ~ 30

NPGF exported to a total of $44.71 M of API products to U.S. between 2006 and 2008, including the 

following: 

• Vitamin B1, C, etc. 

• Other amino acids 

• Sulfadiazine 

• Chloramphenicol, its derivatives and salts 

Quality System Certification:

• All production facilities have been granted Chinese GMP certifications 

• Sulfadiazine and Piracetam granted European COS certificate 

• Sucralfate, Amantadine, Rimantadine passed U.S. FDA inspection. 

• Levocarnitine passed Japanese certification in July 2009. 

U.S. Importers:

• Atlantic Chemicals Trading 

• Premium Ingredients, International 

• AIDP 

International Partners: 

• Atlantic Chemicals Trading GMBH 

• Premium Ingredients, International 

• BASF Corp. 

• Kraemer & Martin GMBH 

Shandong Xinhua Pharmaceutical Co., Ltd. 

Address: Zibo High-tech Development Zone, Zibo, Shandong, P. R. China 255005 

Website: http://www.xhzy.com

Overview: 

Shandong Xinhua Pharmaceutical Co., Ltd. (Xinhua Pharm) was established in 1993 through 

restructuring the former state-owned Shandong Xinhua Pharmaceutical Factory, which was initially 

founded in 1943. Xiahua Pharm is also a public listed company on the Shenzhen Stock Exchange Market 

(Stock code: 000756) since 1997. 

Xinhua Pharm had 2.16 B RMB in total assets and employed nearly 5,000 people by 2008. 

Revenue & Profit:29

 

29 Source: Annual Financial Reports 2006-2008 officially released by Xinhua Pharm. 
 NSD Bio Group, LLC                                                                ~  ~ 31

Total Revenue Net Profit 

Year RMB 

million 

US$ 

million 

RMB 

million 

US$ 

million 

2008 2,096.96 306.91 33.97 4.97 

2007 1,886.98 276.18 32.72 4.79 

2006 1,667.25 244.02 22.71 3.32 

Products:

NAME DMF/COS/FDA

Acetylsalicylic Acid DMF/COS/FDA 

Refined Acetylsalicylic Acid DMF/COS 

DC-90Acetylsalicylic Acid DMF. 

 EDMF Analgin 

EDMF/COS 

Analgin-dc90 DMF 

Metamizole Magnesium DMF 

 DMF Trimethoprim 

DMF/COS 

DMF 

Propyphenazone DMF/COS 

Caffeine Anhydrous DMF/COS 

Theophylline Anhydrous DMF/COS/FDA 

Calcium Theophylline DMF 

Aminophylline Anhydrous DMF 

Phenazone(Antipyrine) DMF/COS 

Amidopyrine DMF 

Hydrocortisone Base Mic. DMF/FDA 

Hydrocortisone Acetate Mic. DMF 

Ibuprofen DMF/FDA/COS 

Pipemidic Acid Trihydrate DMF 

Pipemidic Acid Anhydrous DMF 

Amidopyrine DMF 

Clidamycin Phosphate DMF 

Exports to U.S.:

Xinhua Pharm exported a total of $23.59 M of API products to U.S. between 2006 and 2008, including the 

following: 

• Aspirin 
 NSD Bio Group, LLC                                                                ~  ~ 32

• Isoprofen 

• Cortisone, hydrocortisone, deltacortisone, etc. 

• Caffeine and salts 

• Crylic acid and its salts 

Quality System Certification:

• All production facilities have been granted Chinese GMP certifications 

• The table in the Product section has listed all the international certifications that Xinhua has received. 

U.S. Importers:

• PEPSI BEVERAGES INTERNATIONAL 

• AF PHARMA LLC 

• EAST WEST TECHNOLOGIES INC 

• ROCHEM INTERNATIONAL INC. 

Zhejiang Hisun Pharmaceutical Co., Ltd. 

Address: 46 Waisha Road Jiaojiang District, Taizhou City Zhejiang Province, P.R. China 318000 

Website: http://www.hisunpharm.com

Overview:

Founded in 1956, Zhejiang Hisun is one of the leading API manufacturers in China with significant 

overseas contract manufacturing experience with Western firms. The company became a public-listed 

company (SSX: 600267) on China’s Shanghai Stock Exchange Market in 2000, with 449 M RMB ($65 M) 

registered capital. Hisun currently employs 3,660 people, including 1200 technicians or engineers, 400 

researchers, and 1560 production workers. 

Products and Exports: 

Hisun produces API, chemical intermediates, finished pharmaceuticals, biologics, traditional Chinese 

medicines, and excipients. 80% of Hisun’s API products are exported to 30 countries, with a special focus 

on Europe and North America. It is estimated that Hisun-made anti-tumor API exports have occupied 

60% of the generic API market in U.S. Hisun’s lipid lowering statin products, ranks second, internationally 

in terms of production size, and has a 33.33% market share of the global market.30

Hisun started regulatory registration in U.S. and European market in 1989 and received its first FDA 

approval in 1992. The company has filed 37 active DMF with FDA by Q1 2009. Hisun received and 

passed a total of 10 times of FDA on-site inspection by 2008. 

At the time of analysis, Hisun had 18 API products, having received FDA approval through Abbreviated 

New Drug Applications, 14 API products, which have received the European CEP certificate (Certificate 

 

30 Xu, Congyu. Innovation, Internationalization and Social Responsibilities—Secrets of Hisun’s Continuous Expansion. 

Observation and Thinking. Jan. 2009 (in Chinese) 
 NSD Bio Group, LLC                                                                ~  ~ 33

of Suitability to Monograph of European Pharmacopoeia), and 1 API product receiving Australia TGA 

certification. 

FDA (U.S.) Approved (18)

Acarbose Epirubicin HCL 

(Crystallized) Cytarabine Doxorubicin HCl 

Fludarabine Sulbactam sodium Bleomycin Sulfate Mitomycin C 

Simvastatin Vinorelbine Tartrate Floxuridine Daunorubicin HCl 

Granisetron HCL Adenosine Bleomycin A2/B2 crude 

Epirubicin HCL 

(Lyophilized) Cladrabine Ivermectin 

COS (Europe) Approved (14)

Acarbose Lovastatin Ivermectin 

Fludarabine phosphate Simvastatin Epirubicin HCL(Crystallized) 

Vinorelbine Tartrate Pravastatin Sodium (Crystallized) Doxorubicin HCL 

Mitomycim Cytarabine Granisetron HCL 

Praziquantel Bleomycin Sulfate 

Quality System Certification:

Hisun’s quality control system is very close to advanced level internationally. The company has passed 

the following inspections: 

• 18 inspections by Chinese SFDA 

• 10 inspections by U.S FDA 

• 1inspection by EU EDQM 

• 1 inspection by U.K MHRA 

• inspections by German FHH 

• inspections by Australia TGA 

• 2 inspections by Japanese PMDA 

• 1 inspection by Korea KFDA 

• ISO9001: 2000 certification 

Revenue & Profit:

31

Total Revenue Net Profit 

Year RMB 

million 

US$ 

million 

RMB 

million 

US$ 

million 

2008 3,181.98 465.71 199.91 29.26 

2007 2,838.77 415.48 149.03 21.82 

 

31 Source: Official Annual Financial Reports released by Hisun to shareholders. 
 NSD Bio Group, LLC                                                                ~  ~ 34

2006 2,311.51 338.31 83.62 12.24 

International Partners: 

Hisun has established solid business relationships with many pharmaceutical giants, such as Eli Lilly, 

Merck, Novartis, Bayer, and Amgen. 

Eli Lilly: In June 2003, Eli Lilly announced a $70 M partnership with the WHO; the U.S. Department of 

Health and Human Services ́ Centers for Disease Control and Prevention (CDC); and other entities. The 

goal of the partnership is to increase the supply and proper use of capreomycin and cycloserine, support 

efforts to enhance disease surveillance and healthcare worker training, and transfer proprietary Lilly 

manufacturing technology to countries where the MDR-TB is most prevalent. Lilly therefore signed 

technology transfer agreements with companies in several developing countries, and Zhejiang Hisun was 

selected as one of Lilly’s global partners. In August 2005, Eli Lilly officially signed an agreement with 

Hisun to transfer the Capreomycin API manufacturing technology to Hisun. Eli Lilly has injected $4.38 M 

into the project for a four-year term. Meanwhile, Lilly has invested more than RMB 100 M ($14.27 M) into 

the project, including improving the technology and expanding production capacity. Lilly will sell Hisunproduced capreomycin APIs and later, preparations, on the global market. Hisun will sell the products in 

China. The new production base, which should be completed in 2010, will be used to produce between 3 

to 5 million doses of lyophilized powder for injection every year. 
 NSD Bio Group, LLC                                                                ~  ~ 35

Recent Case Studies of Drug Safety Incidents 

Bogus or substandard medicines have been harming Chinese drug consumers for decades. From the 

notorious “Jinjiang major fake-drug case” in the early 1980s, to the infamous “Qiqihar No. 2 Pharma fake 

drugs” and “Xinfu substandard drugs” incidents in 2006, numerous innocent Chinese citizens have been 

injured or even killed by counterfeit or substandard medications supplied by domestic pharmaceutical 

companies. 

Back in the early 1980s, the “Jinjiang major fake-drug case” represented an organized, large-scale fake 

drug production and distribution crime enterprise. Up to 46 factories were opened between 1983 and 

1985 in a medium-sized town in Jinjiang, Fujian Province, producing fake traditional Chinese herbal 

medicines in order to realize high profits. These factories used inexpensive edible substances such as 

white fungus to produce fake herbal medicines. The fake medicines were sold to many provinces in China 

and generated millions of RMB of illegal profits for the factories. 

In the past five years, particularly in 2006, three major drug-quality-related incidents killed dozens and 

sickened hundreds of patients in China: the Xinfun clindamycin substandard drug adverse event, the 

Qiqihar counterfeit Armillarisin A injections incident and the Yu Xing Cao Injection adverse event. As a 

result, China’s drug regulators and responsible manufacturers received overwhelming condemnations 

from the Chinese public. The entire country questioned Chinese drug authorities through public media, 

“Why have our human bodies become live test samples for pharmaceutical products? When will fake or 

inferior drugs disappear in China?” The incidents thereafter instigated serious debate on drug safety 

enforcement within the Central Chinese government in subsequent years. 

The above-mentioned drug safety accidents revealed loopholes in China’s drug safety surveillance and 

legitimate enforcement and compliance requiremnents. They also revealed many existing gaps in the 

Chinese healthcare sector, such as abuse of antibiotics, unhealthy competition between pharmaceutical 

companies, commercial bribery, and corruptions and/or neglect of duty of drug-bidding officials. In 

addition, these incidents suggested that Chinese pharmaceutical manufacturers have a long way to go to 

improve their quality assurance system in accordance with international standards. 

Chinese drug regulators and authorities continue to face a long and arduous journey to combat against 

counterfeit or inferior-quality pharmaceutical products. The good news is that Chinese authorities are 

making efforts to improve the image of “made-in-China” pharmaceutical products, both home and abroad. 

For example as reported earlier in this report, the SFDA is working with U.S. FDA to establish a more 

effective and efficient system to enhance the drug safety of Chinese pharmaceuticals. 

Xinfu Clindamycin Injections (2006) 

Fact: Death: 11 Injured: 400 

Clindamycin Phosphate Glucose Injection under the brand name of “Xinfu” was manufactured by Anhui 

Huayuan Biopharmaceutical Co.,Ltd. (Anhui Huayuan). Founded in 1970, the company is located in 

Fuyang, Anhui Province in South China. Huayuan was a subsidiary of Shanghai Worldbest (Huayuan) 

Co., Ltd. (Stock code: 600094), a public listed company on the Shanghai Stock Exchange Market. 

All three injection production facilities of Anhui Huayuan passed GMP inspection conducted by SFDA in 

1999 and 2002. The facilities received production approval to produce Xinfu from the SFDA in 2001 

(Approval No. H20010813). 

Between July and August 2006, Xinfu injections caused 11 deaths and put hundreds of peoples’ lives in 

danger in several provinces in China such as Qinghai, Guangxi, Zhejiang, Heilongjiang, and Shandong. 

The cause of these adverse events identified by the SFDA was a bacterial infection during the production 

process. Below is a review of this incident. 
 NSD Bio Group, LLC                                                                ~  ~ 36

July 27, 2006: SFDA first received ADR reports from Qinghai Provincial FDA, associated with 

Clindamycin Injection under the brand name of “Xinfu” produced by Anhui Huayuan. Patients receiving 

Xinfu injections developed clinical symptoms such as chest distress, palpitation, shivering, stomach pain, 

diarrhea, nausea, vomiting, allergic shock, and liver and kidney damage. Similar ADR reports were 

received from other provinces. 

July 28, 2006: SFDA sent three investigation teams to Qinghai Province and Anhui Huayuan. 

Aug. 1, 2006 Production of Xinfu was suspended. 

Aug. 3, 2006 Anhui Huayuan Pharma stopped all production activities. 

Aug. 4, 2006 SFDA suspended production of Xinfu products. SFDA also announced and monitored 

nationwide recall of Xinfu by Anhui Huayuan. 

Aug. 11, 2006 SFDA confirmed that the cause of the incident was that the manufacturer violated GMP 

requirements by failing to follow the correct disinfection procedures. According to the 

production manual, the injections are required to go through 30 minutes disinfection 

process under 105OC. However, Xinfu only received 1 to 4 minutes of disinfection 

under 100-104 OC. 

Aug. 15, 2006 SFDA officially released “Investigation Results of Adverse Drug Events Induced by 

Anhui Huayuan-produced Xinfu injections”. Between June and July 2006, Anhui 

Huayuan supplied 3.7 million of Xinfu products and 3.19 million units had been 

distributed to 26 provinces across China. SFDA recalled and suspended 2.3 million of 

Xinfu injection units by Aug. 14, 2006. 

Sep. 31, 2006 The CEO of Anhui Huayuan committed suicide under the pressure of being arrested 

and bankruptcy. 

Oct. 16, 2006 SFDA concluded that Xinfu belonged to the “substandard drug” category, in 

accordance with China’s Drug Administration Law. SFDA sanctions included the 

following: 

• Anhui Provincial Food and Drug Administration (Anhui FDA) was authorized to 

confiscate all the proceeds from Xinfu sales and imposed a two time fine based on 

the sales proceeds. 

• Anhui FDA was authorized to suspend all production activities of Anhui Huayuan and 

revoke the GMP certificate of Huayuan and the production approval of Xinfu. 

• Anhui FDA was authorized to supervise the destruction of all recall “Xinfu” products. 

• Several senior executives of Anhui Huayuan and officials of Anhui Fuyang FDA 

received “administrative disciplinary penalties”. 

Discussion: 

Xinfu injections caused 11 deaths and put hundreds of Chinese citizens in significant peril to their health. 

SFDA concluded that Xinfu was a “substandard drug” and the persons responsible for the crime received 

“administrative penalties”, instead of “criminal charges” as expected and warranted. The CEO of Anhui 

Huayuan committed suicide before being arrested. 
 NSD Bio Group, LLC                                                                ~  ~ 37

Qiqihar Counterfeit Armillarisin A Injections (2006) 

Fact: Death: 14 Injured: 20-50 

Qiqihar No. 2 Pharmaceutical Co., Ltd. (Qiqihar No. 2 Pharma) was a medium-size pharmaceutical 

manufacturer in Qiqihar, Heilongjiang Province in Northern China. The company was initially a collective 

of group-owned companies before merging into the Heilong Group. In September 2005, the company was 

acquired by Beijing Dongshengyuan Investment Co. for 14.42 M RMB. Qiqihar No. 2 Pharma invested 30 

M RMB to meet Chinese GMP requirements and passed GMP inspection in 2002. 

Armillarisin A is mainly administered as an injection to treat acute or chronic cholecystitis and chronic and 

atrophic gastritis. However, in 2006, Armillarisin A Injection produced by Qiqihar No. 2 Pharma caused 11 

deaths in Guangdong Province and dozens of adverse drug events in China. The causative factor of the 

disaster was the choice of a substitute for propylene glycol as excipients for the production of the 

Armillarisni A Injection. However in September 2005, the manufacturer purchased fake propylene glycol, 

which was actually toxic diglycol. The poisonous diglycol caused acute kidney failure for patients 

receiving Armillarisin A. 

March 2006 Thanks to its “competitive price”, Qiqihar’s Armillarisin A Injection defeated other 

competitors and won the collective drug bidding offered by Guangdong Province-affiliated 

hospitals, and therefore was the universal Armillarisin A Injection to all the provincial-level 

hospitals. The Third Affiliated Hospital of Sun Yat-sen University in Guangzhou (capital of 

Guangdong Province) was the first hospital to purchase Qiqihar No.2 Pharma’s Armillarisin 

A Injection. 

April 22-30, 2006 64 patients in the Third Affiliated Hospital of Sun Yat-sen University received 

Armillarisin A Injection. Several patients with severe hepatitis developed kidney 

failure. After a specialist team meeting and diagnosis, collected evidence pointed to 

one of the medications the patients received: Armillarisin A Injection produced by 

Qiqihar No. 2 Pharma. The hospital therefore reported the serious ADR to the 

Guangdong FDA and Provincial ADR Monitoring Center. Guangdong FDA notified all 

hospitals in the province to stop using Armilarisin A Injection. Meanwhile, Guangdong 

Provincial Drug Control Institute was assigned to conduct analysis on the product 

samples. 

May 3, 2006 Guangdong FDA reported the serious ADRs to the SFDA. The SFDA immediately 

authorized Heilongjiang FDA to suspend production and distribution of the Armillarisin A 

Injection in Qiqihar No. 2 Pharma. 

May 9, 2006 SFDA issued an urgent nationwide warning on Armillarisin A Injection and an edict for a 

nationwide suspension using of the product. 

May 12, 2006 SFDA issued an urgent notice calling for a nationwide suspension on the distribution of 

counterfeit Armillarisin A Injection supplied by Qiqihar No. 2 Pharma. 

May 14, 2006 Qiqihar Municipal Government released investigation results: 

• The cause of the accident was Qiqihar No. 2 Pharma’s purchase of a fake 

pharmaceutical excipient, propylene glycol, used in production of Armillarisin A 

Injection. 

• The fake propylene glycol was actually diglycol, a toxic industrial solvent, whose price is 

one half of propylene glycol. The alleged chemical dealer, Mr. Guiping Wang, forged 

many licenses, including his business license, drug registration and manufacturing 

licenses to sell products to pharmaceutical companies. 
 NSD Bio Group, LLC                                                                ~  ~ 38

• Wang allegedly sold one ton of diglycol, claiming it was "propylene glycol", in the name of 

the Taixing General Chemical Plant in the eastern Jiangsu Province to a 

pharmaceutical company in Heilongjiang Province. 

• Qiqihar No. 2 Pharma failed to test propylene glycol for the counterfeit "propylene glycol" 

as required under SFDA regulations before buying the chemical, nor did it crosscheck 

the licenses provided by Guiping Wang. 

• Wang arrested by the police. 

May 18, 2006 SFDA officially issued an announcement stating Qiqihar No. 2 Pharma had been producing 

and marketing “counterfeit drug products”. SFDA therefore authorized the Heilongjiang 

FDA to revoke the production license and GMP certificate of Qiqihar No. 2 Pharma. 

May 22, 2006 Prime Minister Jiabao Wen issued an order to “thoroughly investigate the Qiqihar No. 2 

Pharma counterfeit drugs.” 

May 24, 2006 SFDA issued an urgent notice (SFDA 2006, No. 9) calling for a nationwide enforcement on 

drug safety surveillance involved in the drug supply chain, from research, production, 

distribution and prescription of the drug. 

July 19, 2006 Prime Minister Jiabao Wen, chaired a State Council Meeting, which focused on enforcing 

harsh punishment on the 21 responsible persons associated with the accident. 

April 29, 2008 Five key executives at Qiqihar No. 2 Pharma were sentenced 4 to 7 years in prison by 

Guangzhou Intermediate People’s Court, on charges of “Negligently Causing Serious 

Accident Crime”. 

Chuanhua Zhu Vice General Manager 7 years in prison 

Guifeng Chen Supervisor of Assay Lab 6 years in prison 

Zhongren Niu Purchaser 5.5 years in prison 

Xingping Guo Vice General Manager 4 years in prison 

Jiade Yin General Manager 4 years in prison 

Sep 8, 2008 Guiping Wang, the illegal chemical dealer, was sentenced to life imprisonment and a fine of 

400,000 RMB by Jiangsu Provincial Supreme People’s Court. 

Discussion: 

Qiqihar No.2 Pharma’s counterfeit Armillarisin A Injection was responsible for 14 deaths in Guangdong 

Province between 2006 and 2008. This incident exposed flaws in China’s drug administration and 

business licensing administration infrastructure. It shocked the Chinese community as well as the 

international community that a business man, Mr. Guiping Wang was successfully able to forge basically 

“everything” -- from his business license, pharmaceutical production license, to the pharmaceutical 

approval certificate, and was eventually able to sell fake pharmaceutical excipients - diglycol as propylene 

glycol to the Qiqihar No. 2 Pharma. It was also unbelievable that Qiquhar No. 2 Pharma, an official GMPpharmaceutical manufacturer certified by the SFDA, could fail to test their purchased excipients according 

to GMP standards. Quality control supervisors at Qiqihar No. 2 Pharma did a basic test of the fake 

propylene glycol and were aware that its relative density “did not meet the requirements”. However, they 

failed to do a further analysis and “passed” the fake excipient forward to production of Armillarisin A 

Injections. 
 NSD Bio Group, LLC                                                                ~  ~ 39

Perhaps what the Vice General Manager confessed to the Guangzhou Intermediate Court helped explain 

everything. Xingping Guo, the Vice GM at Qiqihar No. 2, declared that, “we actually bought the GMP 

certificate for 100,000 RMB.”32

Shanghai Hualian Major Drug Production Quality Accident (2007) 

Fact: Death: 0 Injured: 130 

Shanghai Hualian Pharmaceutical Factory (Shanghai Hualian) was a Shanghai-based state-owned 

company with a “solid reputation” and over 60 years of history. The company was acquired by Shanghai 

Pharmaceutical (Group) Co. Ltd., at one time one of the leading state-owned pharmaceutical enterprises 

in China. Some of Shanghai Hualian’s products had a 50% share of the domestic market. With more than 

4,000 employees, Hualian produced over 100 medicines including Methotrexate, Cytarabine, and 

Vincristine Sulfate, used via intravenous infusion for use in various types of cancer chemotherapy 

regimens. 

During July and August 2007, Shanghai Hualiang’s substandard Methotrexate and Cytarabine injections, 

tainted by Vincristine Sulfate, disabled 130 leukemia patients and sickened nearly 200 patients across 

China. 

July-Aug., 2007 National ADR Monitoring Center received ADR reports from Shanghai, Guangxi, 

Beijing, Anhui, Hebei, and Henan Province, indicating that some leukemia patients 

developed peripheral neuropathy such as walking with difficulty, after receiving 

intrathecal injections of Methotrexate and Cytarabine produced by Shanghai Hualian. 

Sep.14, 2007 SFDA and Ministry of Health co-issued a nationwide announcement calling for 

immediate suspension of any production, sales, and usage of Methotrexate and 

Cytarabine injections produced by Shanghai Hualian. SFDA also confirmed that small 

amounts of Vincristine Sulfate were detected in some batches of Methotrexate and 

Cytarabine injections manufactured by Shanghai Hualian, which had caused the 

neuropathological adverse events. Shanghai Police were called to investigate. 

Dec.13, 2007 SFDA revoked the production license of Shanghai Hualian and confiscated all of the 

factory's illegal proceeds (80,000 RMB) from the sales of these medicines. SFDA also 

imposed the highest penalty based on Drug Administration Law, which totaled 1.16 M 

RMB. The police detained the managers who were found hiding information when the 

government was investigating their products. Shanghai Municipal Government also 

requested Shanghai Pharma Group to establish a compensation team to handle 

compensation issues for the victims. 

March 28, 2008 SFDA cancelled all the drug approval numbers issued to Shanghai Hualian. 

Discussion: 

Shanghai Hualian was a reputable state-owned pharmaceutical manufacturer with 60 years of history. 

Methotrexate Injection is a cheap medicine priced at 6.07 RMB per dose of injection, and most Chinese 

manufacturers elect not to produce this product because of the low margins. Therefore, Hualian was 

assigned to produce methotrexate raw materials and preparations by the government. To reduce the 

production cost, the company used the same production line for different products, which is acceptable if 

they adhere the cleaning procedures, as part of their corporate quality control program. However, Hualian 

exercised gross negligence in the thorough cleaning of production lines. Therefore, Methotrexate and 

Cytarabine injections were contaminated from the Vincristine Sulfate residue. 

 

32 Xin Kua Bao (News Express). Qiqihar No. 2 Pharma’s GMP Certificate was purchased for 100,000 RMB. August 9, 

2007. Available at: http://epaper.xkb.com.cn/view.php?id=113856 (in Chinese) 
 NSD Bio Group, LLC                                                                ~  ~ 40

Dalian Jingang-Andi Counterfeit Rabies Vaccines (2009) 

Fact: Death: 0 Injured: 0 

Dalian Jingang-Andi Bio-products Co., Ltd. (Jiangang-Andi) was a medium-sized biopharmaceutical 

company based in Dalian, Changchun Province in Northeastern China. The company had been focusing 

on developing and producing vaccine products since 2002. Jingang-Andi’s rabies vaccines had a solid 

domestic market share until the company added some illegal substance into the vaccine to “improve the 

efficiency of the vaccines.” 

In January 2009, the National Institute for Control of Pharmaceutical and Biological Products (NICPBP) 

randomly tested rabies vaccine samples produced by Jingang-Andi for monitoring purpose. After a lab 

analysis, NICPBP scientists identified the content of nucleic acid in the vaccine samples. Although nucleic 

acid has been confirmed by animal tests that it can serve as an adjuvant to increase the effect of animal 

vaccines, its effect on human-use vaccines still needs to be further examined and approved through 

human clinical tests. Whether nucleic acid can be used as an adjuvant to improve human vaccines is still 

being determined, as first stage clinical trials are being conducted. Jingang-Andi illegally added nucleic 

acid to its rabies vaccine products. According to China’s Drug Administration Law, Jingang-Andi’s 

behavior is considered illegal for producing counterfeit medicines deliberately. 

In February 2009, SFDA recalled all 3.389 million doses of rabies vaccines produced by Jingang-Andi in 

2008, and revoked the production license and GMP certificate of the company. Dalian FDA imposed a 

penalty equivalent to three times sales proceeds to the company. The three individuals most responsible 

for this criminal activity, the General Manager, Vice General Manager, and the Purchaser for the 

company, were detained by the police. 

To note, no adverse drug reports were received related to the counterfeit rabies vaccines. 

Other Examples of Tainted, Unsafe Drug Distribution and Use 

 1. Jiangsu Fake Human Albumin Injections and Rabies Vaccine cases 

In 2008, Jiangsu Province in east China cracked down on 10 major fake-drug cases, including two 

cases linked to fake human albumin injection and rabies vaccines. Other eight cases were 

associated with counterfeit eye drops, the distribution of bogus pharmaceuticals through the 

national postal system, and fake “Gran” (rh-G-CSF), 

During 2007 and 2008, four people in Jiangsu Province were killed and dozens were sickened 

after receiving bogus human albumin injections and rabies vaccines. These incidences were 

caused by two separate groups of fake-drug producers and distributors in Nantong and Wuxi City 

in Jiangsu. Several rural physicians were also involved in selling these fake medicines. 

Astonishingly, the fake albumin injections were filled with tap water, which contained zero 

therapeutics (human albumin). Over 10,000 doses of fake human albumin injections were 

identified and confiscated. The mastermind was given suspended death sentence and her 

associates were sentenced 14 to 17 years’ imprisonment. 

2. Hubei-based Large-scale Fake Medicines in 2009 

In May 2009, the Beijing FDA in partnership with Beijing Police, cracked down on a large fake 

medicine case originated from Hubei Province. 149 people were detained and 10 production and 

distribution facilities and offices were shut down. 120 types (10 tons) of bogus medicines, mostly 

traditional Chinese medicine pills, and many production facilities, in addition to ten vehicles were 

confiscated by the police. The mastermind, Bing Li and Zhiguo Li, was based in Hubei Province. 

Records showed that these fake medicines had been sold to more than 17,000 people across 

China. They even posted advertisements and used some official healthcare organizations to 

advertise their fake medicines. 
 NSD Bio Group, LLC                                                                ~  ~ 41

Brief Overview of Australian Regulatory System 

The Department of Health and Aging, Therapeutic Goods Administration implements the Therapeutic 

Goods Act of 1989 (the “Act”) which requires that the standard of manufacture, and quality control of 

therapeutic goods manufactured outside Australia, be taken into consideration for the registration or 

listing of those therapeutic goods 33 on the Australian Register of Therapeutic Goods (ARTG), unless the 

goods are exempt 34from this requirement by the Act. 

A sponsor applying to the Therapeutic Goods Administration (TGA) for registration or listing of a 

therapeutic good manufactured outside Australia, in the absence of a TGA audit, must provide an 

acceptable form of evidence to show that the manufacture of the goods is of an acceptable standard. 35

This is referred to as Good Manufacturing Practice (GMP) clearance of overseas manufacturers. 

Sponsors of therapeutic goods manufactured outside Australia must obtain GMP Clearance for the 

overseas manufacturer(s) before the goods are entered on the Australian Register for Therapeutic Goods 

(ARTG). Sponsors must ensure that current GMP documentary evidence is retained thereafter. It is a 

standard condition of registration, or listing, to provide this evidence when requested. Failure to supply 

this information is likely to result in the product’s registration/listing being cancelled. 

The TGA reserves the right to conduct an audit 36 (inspection) of any overseas manufacturer, irrespective 

of the documentary GMP evidence submitted to the TGA, even if there is a current GMP Clearance. In 

addition to the information outlined below, the TGA also reserves the right to request additional 

documents for the assessment of the GMP Clearance application. 

Australia participates in several international arrangements including with various countries, including the 

United States. The TGA has an agreement with the US FDA that provides for the exchange of information 

in relation to manufacturers for regulatory purposes. However the TGA does not automatically grant a 

GMP Clearance to Sponsors of US manufacturers inspected by the US FDA. 

GMP Clearance Process for Overseas Manufacturers 

To apply for a GMP Clearance of an overseas manufacturer, sponsors must complete an electronic 

Overseas Manufacturer Clearance Application via the Manufacturers Information System (MIS)37 for each 

manufacturing site, and pay the applicable fee. If available in electronic form, the Sponsor may attach the 

relevant documentary evidence of the manufacturing standard to the MIS application. 

An Australian Sponsor must demonstrate that the overseas manufacturers, from which they source 

medicines and API, comply with the standard equivalent to that expected for Licensed Australian 

manufacturers. In these instances, the acceptable standards are the Australian Codes of GMP for 

Medicinal Products or API. 

 

33 Therapeutic Goods Act 1989 Subsections 25(1)(g), 26(1)(g), 26A(3) 34 Therapeutic Goods Act 1989 Subsections 25(2D), 26(2C), 26A(7) 35 Therapeutic Goods Act 1989 Subsections 25(2)(a), 26(2)(a), 26A(4)(a) 36 The term “audit” is used in Australia, whereas overseas regulatory agencies may use the term “inspection”. These 

two terms may be used interchangeably. 

37 www.tgasime.health.gov.au 
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Active Pharmaceutical Ingredients (API) 

There are three principal types of API: 

i. Non-Sterile; 

ii. Sterile; and 

iii. Other High Risk API including, for example, those derived from human or animal tissues or 

recombinant technology. 

Some API derived from tissues of animal origin may not be high risk (e.g. fish extracts), probiotics or 

those derived by classical fermentation technology. 

Currently, evidence of compliance with GMP for API manufacture is usually only required for qualified 

medicines evaluated by the Drug Safety and Evaluation Branch of the TGA. This may also apply to ‘active 

premixes’ evaluated by the TGA’s Non-Prescription Medicines Branch. 

If all steps of manufacture are not carried out at a single site, the manufacturer that conducts the final 

steps of manufacture, purification, drying, milling and sterilization (if applicable) of the bulk active 

ingredient is responsible to ensure that key intermediates are also manufactured in accordance with 

GMP. Separate GMP Certification need not routinely be supplied for the manufacturers of these 

intermediates. However, the TGA reserves the right to request evidence of GMP compliance for the 

manufacturers of critical intermediates, if deemed necessary. 

Australian Quarantine and Inspection Service (AQIS), 

Department of Agriculture, Fisheries and Forestry 

Human therapeutics and medicines containing biological material of animal or microbial origin 

 It is the importer’s responsibility to identify and to ensure it has complied with, all requirements of any 

other regulatory and advisory bodies prior to and after importation including the Australian Customs 

Service, Therapeutic Goods Administration, Department of Health and Ageing, Department of the 

Environment, Water, Heritage and the Arts, Australian Pesticides & Veterinary Medicines Authority and 

any State agencies such as Departments of Agriculture and Health and Environmental Protection 

authorities. 

Pharmaceutical excipients are highly processed substances (other than the active pharmaceutical 

ingredient) that are components of therapeutic products. In Australia, the following substance groups are 

considered pharmaceutical excipients: 

Alcohols Amino acids Essences Esters Fish oil (other than salmon oil)

Gelatin* Homeopathics Pectins Plant acids Plant extracts

Plant flours Plant gums Plant juices Plant oils Plant waxes

Polysorbates* Resins Starches Stearates* Sugars

Tinctures Vinegars Vitamins Water Refined wool fats e.g. Lanolin

* Note: Gelatin and polysorbates and stearates derived from animals are not considered AQIS approved 

pharmaceutical excipients for use in animals. An AQIS Import Permit is required for veterinary 

therapeutics containing these ingredients and for these ingredients that are imported for use in 
 NSD Bio Group, LLC                                                                ~  ~ 43

manufacture of veterinary therapeutic products. This also applies to gelatin, polysorbates and stearates 

for use in animal feed, animal feed supplements and animal vaccines. 

Dietary supplements and natural medicines containing ingredients of plant origin 

It is the importer’s responsibility to identify the component plant ingredients of the product and then 

search the database of Imported Food Control Act 1992 [ICON], administered by AQIS, for the specific 

import conditions for each plant ingredient identified. 

An Import Permit is required only for those dietary supplements and natural medicines that contain plant 

material listed on ICON as prohibited and do not comply with the non-commercial conditions above. 

Regulation of complementary medicines in Australia38

In Australia, medicinal products containing herbs, vitamins, minerals, and nutritional supplements, 

homoeopathic medicines and certain aromatherapy products are referred to as “complementary 

medicines”. These are regulated as medicines under the Act. Complementary medicines comprise 

traditional medicines, including traditional Chinese medicines, Ayurvedic medicines and Australian 

indigenous medicines (see Figure 3). 

Figure 3 - Classes of Complementary Medicines 

COMPLEMENTARY MEDICINES

Herbal 

Medicines

Traditional 

Medicines

Vitamins & 

Minerals

Nutritional 

Supplements

Homoeopathic 

Medicines

Aromatherapy 

Products

Ayurvedic 

Medicines

Traditional 

Chinese 

Medicines

Other 

Traditional 

Medicines

Other terms sometimes used to describe complementary medicines include 'alternative medicines', 

'natural medicines' and 'holistic medicines'. 

Complementary medicines are generally available for use in self-medication by consumers and can be 

obtained from retail outlets such as pharmacies, supermarkets and health food stores. While the 

majority of complementary medicines are indicated for the relief of symptoms of minor, self-limiting 

conditions, many are indicated for maintaining health and well being, or the promotion or enhancement 

of health. 

 

38 Australian Government Department of Health and Ageing, Therapeutic Goods Administration; 

http://www.tga.gov.au/cm/cmreg-aust.htm 
 NSD Bio Group, LLC                                                                ~  ~ 44

Regulatory framework for medicines in Australia 

The Therapeutic Goods Administration (TGA) is responsible for administering the provisions of the Act. 

The overall objective of the Act is to ensure the quality, safety, efficacy, and timely availability of 

therapeutic goods, including medicines and medical devices that are supplied in or exported from 

Australia. While the Act provides a substantially uniform national system of controls over therapeutic 

goods, other Commonwealth and separate State and Territory legislation may apply to certain 

therapeutic goods. The Act includes requirements for all therapeutic goods as well as specific 

requirements for different types of medicines, such as advertising, labeling, and product appearance. 

For the purpose of regulating complementary medicines, the Act and the Therapeutic Goods 

Regulations 1990 (the “Regulations”) respectively define what is a complementary medicine and 

designate the types of active ingredients that may be used in such medicines. 

A complementary medicine is defined as a therapeutic good consisting wholly or principally of one or 

more designated active ingredients each of which has a clearly established identity and a traditional 

use. Traditional use means use of the designated active ingredient that is well documented, or 

otherwise established, according to the accumulated experience of many traditional healthcare 

practitioners over an extended period; and accords with well-established procedures of preparation, 

application and dosage. 

The TGA maintains the Australian Register of Therapeutic Goods (ARTG), a database that includes 

details of all therapeutic goods that are imported into, supplied in, or exported from Australia. It is a 

legal requirement that, unless specifically exempt or excluded, all therapeutic goods are included on 

the ARTG prior to their supply. Therapeutic goods cannot be included on the ARTG, unless a sponsor 

for those goods posts an application.

Adverse drug reaction reporting 

An adverse reaction reporting system for medicines in Australia is well established. The Australian 

'Blue Card' scheme covers all medicines and most health professionals. In addition, sponsors of all 

medicines included in the ARTG are under an obligation to report adverse reactions to the TGA. 

All adverse reaction reports received by the TGA for complementary medicines are reviewed. The 

review may result in a various outcomes, including further analysis of database reports to investigate 

potential safety signals, publication of a report in the Australian Adverse Drug Reactions Bulletin or 

medical journals to raise awareness of the reaction and/or removal of the product from the market. 

Brief Summary 

Australia has a two-tiered regulatory system for medicines, based on risk 

Complementary medicines available for supply in Australia are included on the Australian Register of 

Therapeutic Goods (ARTG) as listed (low risk) or Registered medicines (higher risk) 

Complementary medicines must be manufactured under the same code of Good Manufacturing 

Practice (GMP) as other medicines 

Listed complementary medicines may only contain ingredients permitted by the TGA for use in low risk 

medicines 

Listed medicines are restricted to indication and claims relating to health maintenance, health 

enhancement or non-serious, self-limiting conditions. Generally, they may not refer to a serious form of 

a disease disorder or condition or indicate they are for treatment or prevention. 
 NSD Bio Group, LLC                                                                ~  ~ 45

Registered complementary medicines are assessed individually for quality, safety and efficacy. 

Although Listed medicines are not assessed individually for efficacy, sponsors must certify to the TGA 

they hold evidence to support all indications and claims made for their products. This evidence may be 

audited by the TGA. 

Exported medicines are regulated to ensure that they are of a similar standard to those supplied in 

Australia. 

Post-market regulatory activities, including reporting of adverse reactions, audits of manufacturers and 

laboratory testing is an important element of ensuring the quality, safety and effectiveness of medicines 

regulated by the TGA. 

Brief Overview of Japanese Regulatory System 

Master File System for Drug Substances 

Master File (MF) System 

Master file (hereinafter referred to as “MF”) system for drug substances, etc. allows 

Japanese or foreign manufacturers of drug substances etc. to voluntarily register the data concerning the 

quality/manufacturing methods of their drug substances, etc. used for manufacture of drugs 

(pharmaceutical products) to the review authority. This is similar to the FDA Drug Master File mechanism 

in the U.S. 

The registered data is quoted as the necessary information for an approval review of the drug 

(pharmaceutical product) in which the drug substance is used. Japanese or foreign drug manufacturers 

can register in MF by submitting the required forms to the Pharmaceuticals and Medical Devices Agency 

(hereinafter referred to as “PMDA”) in accordance with the procedures described in the Enforcement 

Regulations for the Pharmaceutical Affairs Law (hereinafter referred to as “Regulations”). 

Foreign manufacturers of drug substances, etc. can also apply for MF registration. In order to apply for 

MF registration, it is necessary for a foreign manufacturer to obtain a foreign manufacturer accreditation 

because the accreditation category, the accreditation number, and the date of accreditation of the foreign 

manufacturing site must be entered in the MF registration application form. 

Candidates for MF Registration 

1) Drug substances, intermediates, and pharmaceutical product materials (materials of pharmaceutical 

products with special dosage form, etc.) However, the drug substances, intermediates and 

pharmaceutical product materials used in OTC drugs (excluding OTC drugs with new active ingredients) 

are not appropriate for registration in MF, as it is considered that their quality and safety are already 

established even in the existing specifications and test methods; and 

2) New excipients and new pre-mix excipients with a different composition ratio from the existing ones; 

and 

3) Materials for medical devices; and 

4) Containers/packaging materials. 
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GMP Compliance Inspection concerning Pharmaceuticals (including API)

of Foreign Manufacturers (Overview Guidance for Foreign Manufacturers) 

GMP Compliance Inspection concerning Pharmaceuticals of Foreign Manufacturers is an inspection on 

the compliance of manufacturing control and quality control methods at the relevant manufacturing sites 

with Japanese GMP (“Ministerial Ordinance on Standards for Manufacturing Control and Quality Control 

for Drugs and Quasi-drugs”, Ordinance of Ministry of Health, Labour and Welfare, No. 179, 2004), 

conducted by the PMDA. GMP compliance is a requirement for marketing approval. 

GMP Compliance Inspections include 1) Inspections that are conducted at the point of application for new 

marketing approval or of application for partial changes of approved information, and 2) Inspections that 

are conducted every five years following the obtainment of marketing approval. In the case of ethical 

drugs, packaging, labeling and storage facilities and external testing laboratories are included in the 

scope of GMP Inspection, in addition to the manufacturing sites of drug products, API (Active 

Pharmaceutical Ingredients) and intermediates. In the case of application for partial change approval, 

GMP Compliance Inspection is not required if the partial change is addition, change, or deletion etc. of 

administration and dosage, or indication that will not affect the methods for manufacturing control or 

quality control. While drug products for over-the-counter drugs are included in the scope of GMP 

compliance inspection, API for over-the-counter drugs are excluded from the inspection (however API of 

over-the-counter for new marketing approval are in the scope of GMP compliance inspection). 

Scope of Drugs subject to GMP Compliance Inspection 

Drugs and API (the products shows below a. ~ g. and API for over-the-counter drugs do not require GMP 

compliance Inspection.) 

a. Drugs which are intended to be used for the extermination or prevention of rats, flies, mosquitoes, fleas 

and other similar creatures, which are not used directly on human bodies. 

b. Drugs, which are intended mainly for disinfection and sanitization, which are not used directly on 

human bodies. 

c. Drugs, which are API intended to be mainly used for the manufacturing of drugs indicated in a. or b. 

d. Drugs that are manufactured at manufacturing sites that only conduct processes of powdering and/or 

cutting crude drugs. 

e. Drugs that are manufactured and/or marketed by pharmacies. 

f. Gases used for medical purposes, 1) nitrous oxide, 2) oxygen, 3) nitrogen, 4) carbon dioxide, 

 5) compound of nitrous oxide and oxygen. 

g. In addition to a. through f., drugs designated by the Minister of Health, Labour and Welfare as causing 

mild action to human bodies are included in the Japanese Pharmacopoeia. 

Facilities subject to Inspection 

All manufacturing sites (including external testing laboratories) listed in the marketing approval application 

or authorization.

Flow of GMP Compliance Inspection 

a. A marketing authorization holder that is applying for the marketing approval, or a marketing 

authorization holder that has obtained marketing approval, shall file an application with the PMDA for 
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GMP compliance inspection of foreign manufacturing sites. The PMDA shall conduct the inspection. 

b. In principle, GMP compliance inspection shall be an onsite inspection by the PMDA. However, 

inspection may be conducted on documents only (hereinafter “document inspection”), by the PMDA’s 

judgment on GMP compliance etc. based on the product’s risk, the country’s GMP standards and their 

operation, and documents submitted for the inspection. 

c. The PMDA shall report the results to the Ministry of Health, Labour and Welfare using the form ‘GMP 

Compliance Inspection Result Notification’. The PMDA shall issue a copy of the GMP Compliance 

Inspection Result Notification to the marketing approval holder that applied for the inspection, as well as a 

copy of the GMP Compliance Inspection Result Notification to the foreign manufacturer of which the 

onsite inspection was conducted. In the case of document inspection, a copy of the GMP Compliance 

Inspection Result Report is not issued. 

The following flowchart demonstrates one scenario of the inspection requirement. 
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Drug Safety Surveillance in Canada 

Canada’s Food and Drugs Act and Regulations authorize Health Canada to regulate the safety, efficacy 

and quality of therapeutic products, which include pharmaceutical drugs, vitamins, vaccines and medical 

devices. Health Canada is the federal department responsible for licensing and regulation drugs in 

Canada, and for the post-market surveillance of these drugs. 

Today, more than 20,000 pharmaceutical products are available for 33 million residents in Canada.39 

However, about 3-4% of drugs approved by Health Canada have been withdrawn from the market for 

safety reasons over the past two decades. Between 2005 and 2007, the percentage of drug withdrawal 

stood at 1.5% to 2%. Drugs which have been withdrawn from Canadian market since August 2004, are 

listed by Table 1:40

TABLE 7: DRUGS WITHDRAWN FROM THE CANADIAN MARKET SINCE AUGUST 2004 40 

Generic Name Brand Name Approval Date Withdrawal Date 

Aprotinin Trasylol Oct. 3, 1995 Nov. 23, 2007 

Estradiol dienanthate Climacteron 1961 Oct. 22, 2005 

Gatifloxacin Tequin Jan. 9, 2001 Jun. 29, 2006 

Lumiracoxib Prexige Nov. 2, 2006 Oct. 3, 2007 

Pergolide Permax 1991 Aug. 30, 2007 

Rofecoxib Vioxx Oct. 25, 1999 Sep. 30, 2004 

Tegaserod Zelnorm Mar. 12, 2002 Mar. 30, 2007 

Thioridazine Mellaril 1959 Sep. 30, 2005 

Valdecoxib Bextra Dec. 11, 2002 Apr. 7, 2005 

Drug Regulation in Canada 

The first step toward federal drug regulation in Canada was the enactment of the Proprietary or Patent 

Medicine Act in 1909. This Act was the first legislation to register medicines, which it limited to secretformula, non-pharmacopoeial packaged medicines. The Act was the beginning of the protection of the 

public against medicines administered without medical supervision. 

Canada's current system of drug regulation is evolved from the Food and Drugs Act of 1920, an act that 

codified all aspects of the domestic pharmaceutical industry. The Food and Drugs Act was amended in 

1951 to require drug developers to seek approval from the federal government before advertising and 

distributing all pharmaceutical products. Pharmaceutical companies must seek Notices of Compliance 

(NOC) from the Canadian government. However, the regulations did not prevent the thalidomide tragedy 

of the early 1960s. 

At present, Canada’s drug regulation system focuses on pre-market activities. A manufacturer can 

market its drug once it has received a NOC from Health Canada. The manufacturer must meet a number 

of obligations, however as long as the drug causes no adverse reactions or the manufacturer does not 

need to make changes to the drug, it may never be subject to review by Health Canada again.41 

 

39 Health Canada, Health Products and Food Branch. (2006). Access to Therapeutic Products: The Regulatory 

Process in Canada

40 Lexchin, J. Drug Safety and Health Canada. Canadian Centre for Policy Alternatives. Apr. 2009 41 Health Canada website. Brief History of Drug Regulation in Canada. Available at: http://www.hc-sc.gc.ca/dhpmps/homologation-licensing/info-renseign/hist-eng.php 
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To gain access to the Canadian market, imported therapeutic products must meet the same standards as 

those manufactured in Canada. They are also subject to the post-market surveillance, inspection and 

investigation conducted by the Health Canada. 

Pre-market Review 

Before new therapeutic products enter the Canadian market, they must pass a regulatory review process 

by the Health Products and Food Branch (HPFB) at Health Canada. HPFB evaluates and monitors the 

safety, efficacy and quality of all therapeutic products available to Canadians. 

HPFB also works with international organizations, including regulatory authorities in other countries, to 

harmonize regulatory standards and processes for therapeutic products, and ensure drug safety at home 

and abroad. 

Once the results of the clinical studies of a new drug have indicated that its potential therapeutic value 

outweighs its adverse effects or toxicity, the manufacturer can seek authorization to market the product in 

Canada by filing a New Drug Submission (NDS) with HPFB. The clinical trials need not have been 

conducted in Canada.39 In case the new product is a generic drug, the manufacturer should submit an 

Abbreviated NDS (ANDS). A Supplemental NDS (SNDS) is to be filed by the manufacturer, if certain 

changes are made to already-authorized products. For those drug products not meeting the definition of a 

“new drug”, a Drug Identification Number (DIN) application must be filed. 

Post-market Surveillance 

Canada Vigilance Program is Health Canada's post-market surveillance program that collects and 

assesses reports of suspected adverse reactions (ARs) for health products marketed in Canada. The 

Program has collected reports of suspected adverse reactions since 1965. In Canada, health products 

include pharmaceuticals, biologics (e.g., fractionated blood products, and therapeutic and diagnostic 

vaccines), biotechnology products, natural health products and radiopharmaceuticals. 

Under Canada's Food and Drugs Act and Regulations, manufacturers of health products are responsible 

for monitoring the safety of their products. It is mandatory for Market Authorization Holders (MAH), which 

include manufacturers and distributors, to submit AR reports to the Canada Vigilance National Office 

under prescribed format and timeline. MAHs are required to send, within 15 days, all reports of serious 

ARs that have occurred in Canada (domestic ARs) and all reports of serious unexpected ARs occurred 

outside Canada for the product they sell to other countries (foreign ARs) to the Canada Vigilance 

Program. 

As part of Health Canada's Canada Vigilance Program, health professionals and consumers can report 

ARs or side effects to Health Canada on a voluntary basis. 

Canada Vigilance Program publishes Guidance Document for Industry - Reporting Adverse Reactions to 

Marketed Health Products to assist industry and health professionals to report ARs. 

The Canada Vigilance Online Database allows access information reported to Health Canada about 

suspected adverse reactions to drugs and health products. 

 

 

Pre-Clinical 

Studies 

Clinical Regulatory Submission Market Public Surveillance, 

Studies Product Review Authorization Access Inspection, and 

 Submission Decision Investigation 

Pre-Market Post-Market 
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In addition, as part of Health Canada’s post-market surveillance initiative, HPFB inspects manufacturing 

plants and other sites where activities involving products covered under the Food and Drugs Act are 

conducted to verify compliance with regulatory requirements. 

MedEffect Canada 

Canada was among one of the nine developed countries (including U.S.) that first participated in the 

WHO Programme for International Drug Monitoring in 1968, which is 30 years earlier than China’s 

participation.42 Health Canada is also ahead of many countries in allowing direct consumer reporting of 

ARs and in posting its entire database of AR reports on a publicly accessible web site.43 

MedEffect Canada (http://www.hc-sc.gc.ca/dhp-mps/medeff/index-eng.php) is the backbone of Health 

Canada’s ADR reporting and monitoring system. It is one of the deliverables of the Therapeutic Access 

Strategy (TAS) - a five-year strategy that began in 2003, to improve the safety, effectiveness and access 

to therapeutic products available to Canadians. The MedEffect program is comprised of a website, and a 

partnership initiative involving professional health care associations and consumer/patient groups. 

MedEffect Canada provides consumers, patients, and health professionals with easy access to: 

• Report an adverse reaction or side effect; 

• Obtain new safety information on drugs and other health products; and 

• Learn and better understand the importance of reporting side effects. 

Adverse Reaction Reports 

In 2008, Health Canada received 20,360 domestic AR reports for health products, of which 69.2% were 

considered to be serious. 71.8% of these AR reports were submitted by MAHs, while 22.6% were from 

consumers, patients and non-hospital based healthcare professionals. 44

The number of domestic AR reports increased by 15.6% in 2008, compared with 2007 (Fig. 1). The 

number of foreign AR reports received from MAHs was 241,417 (Fig. 2). At this time, foreign reports are 

not included in the Canada Vigilance database. 44

FIGURE 3: NUMBER OF DOMESTIC AR REPORTS RECEIVED BY HEALTH CANADA (2001 – 2008)

 

42 Source: WHO Programme for International Drug Monitoring website. Available at: http://www.whoumc.org/DynPage.aspx?id=13140&mn=1514 

43 Vitry A, Lexchin J, Sasich L, et al. Provision of information on regulatory authorities’ websites. Internal Medicine 

Journal 2008;38:559–67. 

44Health Canada. Adverse reaction and incident reporting – 2008. Canadian Adverse Reaction Newsletter Vol. 19, 

Issue 2, April 2009 
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FIGURE 4: NUMBER OF FOREIGN AR REPORTS RECEIVED BY HEALTH CANADA (2001 – 2008) 

Canadian Adverse Reaction Newsletter (CARN) 

CARN is a quarterly publication, which alerts health professionals and consumers to potential health 

concerns based on the review of drug-related case reports submitted to HPFB. The CARN is published 

quarterly by Health Canada's Marketed Health Products Directorate and has existed since 1991. 

The newsletter and advisories are distributed as an attachment to the Canadian Medical Association 

Journal. It is also available on HPFB’s website. 

Drug Safety and Effectiveness Network 

In December 2007, the Prime Minister of Canada - Stephen Harper, announced the Food and Consumer 

Safety Action Plan (FCSAP) to introduce "measures on food and product safety to ensure that families 

have confidence in the quality and safety of what they buy." The FCSAP outlines several measures to 

meet the Government's objectives, including establishment of the Drug Safety and Effectiveness Network 

(DSEN). 

In the summer of 2008, the Canadian federal government announced it was allocating 1M Canadian 

dollars to establish the DSEN to strengthen post-market surveillance of health products. This was 

followed up in January 2009 with an additional 31 M Canadian dollars over the next four years, and 10 M 

Canadian dollars per year after that. This investment has shown the government’s strong commitment to 

enhancing drug safety in Canada. 

Health Canada partners with Canadian Institute of Health Research (CIHR) to establish the DSEN. New 

evidence generated via the DSEN will provide Health Canada with an important additional source of 

information for use in the ongoing assessments of drug products' safety risks. This evidence will also 

support decision-making on public reimbursement, and the safe and optimal prescribing and use of drugs 

within the Canadian health care system.45

The key objectives for establishing the DSEN are to increase the available evidence on drug safety and 

effectiveness available to regulators, policy-makers, health care providers and patients; and, to increase 

capacity within Canada to undertake high-quality post-market research in this area. 

DSEN is expected to complement Health Canada’s Vigilance Program and MedEffect Program to 

strengthen post-market surveillance of health products in Canada.

 

45 Source: CIHR and Health Canada 
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Drug Safety Concerns in Canada 

Although there has been no major drug safety incidents report in Canada in recent years, significant 

limitations in the Canadian legislation have been observed by Canadian policy experts, which have raised 

public concerns on Canadian drug safety surveillance system. For example, based on the Food and 

Drugs Act and Regulations, Health Canada is empowered to cancel the market authorization for drugs 

without prior negotiation with manufacturers, but it cannot force them to recall drugs deemed harmful from 

pharmacies. Another concern is that Health Canada has not established sufficient measurable standards 

for drug safety. For example, there is no standard for the length of time that it will take between the 

receipt of an ADR and when that ADR has been analyzed and posted on Health Canada’s MedEffect 

Adverse Reaction Database. 40

Chinese Pharmaceutical Exports to Canada 

Compared with the U.S., Canada imports a considerably smaller amount of bulk vitamins, antibiotics and 

heparins from China each year. No safety incidents associated with these Chinese imports have been 

reported in Canada. 
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Brief Overview of U.S. Drug Regulatory Systems 

Pharmaceuticals 

The unique challenges facing the inspection and regulatory infrastructure of the United States’ Food and 

Drug Administration (FDA) continue to be widely reported in the public domain46. Chinese firms continue 

to be relied on extensively by the U.S. Pharmaceutical and Dietary supplement industries. A great deal of 

the raw materials imported and used in pharmaceuticals and supplements are Active Pharmaceutical 

Intermediates (API),47 which are required to comply with specific rules and regulations.48 It has been 

reported that Chinese manufacturers have increasing experience with the Center for Drug Evaluation and 

Research (CDER) division of the FDA through Drug Master File (DMF) submissions.49 Briefly, DMFs are 

submissions to the FDA that may be used to provide confidential detailed information about facilities, 

processes, or articles used in the manufacturing, processing, packaging, and storing of one or more 

human drugs. More specifically, they would include raw ingredients, packaging materials, and excipients. 

A DMF is submitted solely at the discretion of the holder (person or company). The information contained 

in the DMF may be used to support an Investigational New Drug Application (IND), a New Drug 

Application (NDA), an Abbreviated New Drug Application (ANDA), another DMF, an Export Application, or 

amendments and supplements to any of these. 

Technical contents of a DMF are reviewed only in connection with the review of an IND, NDA, ANDA, or 

an Export Application. Inspections of drug component producers are undertaken when there is an 

application under review that references a DMF for the manufacture of that ingredient. 

There are four (4) types of DMF's: 

Type II Drug Substance, Drug Product, Intermediates, and 

Materials Used in Their Preparation 

Type III Packaging Material 

Type IV Excipients, Colorant, Flavor, Essence, or Material Used in Their Preparation 

Type V Other – Sterile manufacturing plants, biotech contract 

 facilities, clinical, toxicology 

As of the 2nd quarter of 2009, there were a total of 22,923 DMFs, updated on a quarterly basis, of which 

9,926 are considered active (DMF was found acceptable for filing and is up-to-date).50

Composition of Active DMFs: 

Type II: 6,939 or 69.91% 

Type III: 2,010 or 20.25% 

Type IV: 798 or 8.04% 

 

46 http://www.fda.gov/cder/drug 47 An API is any component that is intended to provide pharmacological activity or other direct effect in the diagnosis, 

cure, mitigation, treatment, or prevention of disease. FDA defines inactive ingredients as any component of a drug 

product other than the API, such as materials that improve the appearance, stability, and palatability of the product. 48 Importation of Active Pharmaceutical Ingredients (API) Requirements FD&C Act 801 [21 USC 381]; 

http://www.fda.gov/RegulatoryInformation/Legislation/FederalFoodDrugandCosmeticActFDCAct/FDCActChapterVIIII

mportsandExports/default.htm 

49 ‘Biopharma CMOs in China’, Ms. Eliza Zhou, BioPlan Associates July 2006 50http://www.fda.gov/Drugs/DevelopmentApprovalProcess/FormsSubmissionRequirements/DrugMasterFilesDMFs/de

fault.htm 
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Type V: 174 or 1.75% 

This breakdown is similar to the composition of active DMF through January 2007.51 

As of 2006, the Chinese manufacturers with the largest number of DMFs include: Zhejiang Hisun 

Pharmaceutical Co., Shanghai Pharmaceutical (Group) Co., Shandong Xinhua Pharmaceutical Co. and 

Tianjin Pharmaceutical (Group) Co.52

By the 1st quarter of 2009, changes in the dynamic landscape for supplying critical raw materials for 

potential import have resulted in other manufacturers leading the way in DMF submissions: Zhejiang 

Hisun Pharmaceutical Company, Ltd., Zhejiang Huahai Pharmaceutical Company, Ltd., Chemwerth, Inc., 

ALP Pharm Beijing Company Ltd., and Tai Heng Industry Company, Ltd. (See Table 9); At the time of this 

report analysis, according to FDA databases, the total number of active Chinese DMFs was 628. In the 

context of numerical magnitude, this equates to roughly 6.32% of all active DMF, but based on China’s 

increasing role in the global pharmaceutical supply network, it is likely this percentage will continue to 

rise. 

In light of continual environmental requirements in the pharmaceutical industry, the National 

Environmental Policy Act (NEPA) 53 requires that all government agencies prepare an Environmental 

Impact Statement (EIS) or a ‘Finding of No Significant Impact’ (FONSI) when they take an action (e.g., 

approving a drug application). Companies submitting an application are required to submit an 

environmental assessment (EA) or a waiver request, to permit FDA to determine whether an EIS or a 

FONSI is needed. 54 Since the FDA does not approve DMFs, no action is initiated, nor is an EA needed. 

Prior Acknowledged Warnings 

In light of recent inquiries of potential health and public safety impacts of unregulated use of Chineseorigin raw ingredients - the impetus of this report, there have been many previous notable documented 

inquiries, congressional testimonies, studies, analyses, and petitions55 on this issue of increasing 

urgency. 

Recent legislation introduced in the 111th Congress – HR 759 (also known as the Food and Drug 

Globalization Act of 2009), underscores the urgency and timeliness to amend the Federal Food, Drug, 

and Cosmetic Act of the FDA to improve the safety of food, drugs, devices, and cosmetics in the global 

market, and for other purposes. Areas of concern contained in the House bill, relevant and related to prior 

inquiries and testimonies, include: 

• Inspection of producers of drugs and active pharmaceutical ingredients. 

• Documentation for admissibility of drug imports. 

 

51 Drug Master Files presentation (revised) November 7, 2008; Dr. Arthur B. Shaw 52 ‘Biopharma CMOs In China’, Ms. Eliza Zhou, BioPlan Associates July 2006 53 http://www.epa.gov/compliance/assistance/sectors/pharmaceutical.html 54 http://www.fda.gov/cder/guidance/1730fnl.pdf 55 Synthetic Organic Chemicals Manufacturers Association Bulk Pharmaceuticals Task Force Petition, Docket# 

2006P-0049, United States House of Representatives Committee on Energy and Commerce, Subcommittee on 

Oversight and Investigation - November 1, 2007; United States Government Accountability Office GAO Testimony 

Before the Subcommittee on Oversight and Investigations, Committee on Energy and Commerce, House of 

Representatives; 

Preliminary Findings Suggest Recent FDA Initiatives Have Potential, but Do Not Fully Address Weaknesses in Its 

Foreign Drug Inspection Program, April 22, 2008, United States Government Accountability Office GAO Report to 

Congressional Requesters; 

Better Data Management and More Inspections Are Needed to Strengthen FDA’s Foreign Drug Inspection Program, 

September 2008, United States Government Accountability Office; 

GAO Testimony Before the Subcommittee on Oversight and Investigations, Committee on Energy and Commerce, 

House of Representatives-Preliminary Findings Suggest Weaknesses in FDA’s Program for Inspecting Foreign Drug 

Manufacturers, Thursday, November 1, 2007 
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• Drug supply quality and safety. 

• Delay, limitation, or denial of inspection. 

• Country of origin labeling. 

• Non-distribution and recall of adulterated or misbranded drugs. 

• Destruction of adulterated, misbranded or counterfeit articles offered for import. 

This bill is in the first step in the legislative process. Introduced bills and resolutions first go to committees 

that deliberate, investigate, and revise them before they go to general debate. However, no matter how 

urgent an issue arises, the majority of bills and resolutions never make it out of committee.56 

The above concerns contained in the House bill represent many of the issues brought up in prior forums 

and reports, as previously stated.57 These issues include the following findings, which are non-exclusive: 

FDA’s effectiveness in managing the foreign drug inspection program continues to be hindered by 

weaknesses in its databases. FDA does not know how many foreign establishments are subject to 

inspection. Instead, FDA relies on databases that were not designed for this purpose. Furthermore, these 

databases contain inaccuracies that FDA cannot easily reconcile. One database indicates there were 

about 3,000 foreign establishments registered to market drugs in the United States in fiscal year 2007, 

while another indicates that about 6,800 foreign establishments actually imported drugs in that year. FDA 

recognizes these flaws. In addition, because the databases cannot exchange information, any 

comparisons of the data are performed manually, on a case-by-case basis. 

FDA typically inspects relatively few foreign establishments. It is suggested that the agency may inspect 

about 7 percent of foreign establishments in a given year. According to preliminary findings of the 

Governmental Accountability Office (GAO) – an independent, non-partisan agency that works for 

Congress – at this rate, it would take FDA more than 13 years to inspect each foreign establishment 

once, assuming that no additional establishments require inspection.58 From prior reporting on this 

matter, the record in China is particularly bad – from 2002 to 2006, an average of just 15 of 714 drug 

plants that export to the U.S. were actually inspected by FDA. At this rate, it would take more than 50 

years to inspect all of the plants. 59 Moreover, it has been reported that the exact number of foreign 

establishments that have never been inspected is unavailable. Most of the foreign inspections performed 

are conducted as part of a review associated with processing an application to market a new drug - DMF, 

rather than inspections for monitoring the quality of marketed drugs. Although the FDA has used a riskbased process to develop a prioritized list of foreign establishments for inspections to monitor the quality 

of marketed drugs, few are completed in a given year. 

Because the foreign inspection process involves unique circumstances that are not encountered 

domestically in the US, this increases the complexity of the situation. For example, in the past, FDA has 

relied on staff with prior experience inspecting domestic establishments to volunteer for inspections of 

 

56 http://www.govtrack.us/congress/bill.xpd?bill=h111-759 [Last Updated: Jul 12, 2009 8:37PM] Last Action: Jan 28, 

2009: Referred to the House Committee on Energy and Commerce. 

57 See note 55 58 Preliminary Findings Suggest Recent FDA Initiatives Have Potential, but Do Not Fully Address Weaknesses in Its 

Foreign Drug Inspection Program, April 22, 2008, United States Government Accountability Office GAO Report to 

Congressional Requesters 

59 ‘The Safety Gap’ New York Times Magazine November 2, 2008 Gardiner Harris 
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sites in foreign countries. Unlike domestic inspections to monitor the quality of a marketed drug, FDA 

does not arrive unannounced at a foreign establishment. It also lacks the flexibility to easily extend foreign 

inspections if problems are encountered, due to the need to adhere to an itinerary that typically involves 

multiple inspections in the same country.60 Finally, as it relates to China, the linguistic barrier can make 

foreign inspections more difficult. FDA does not generally provide translators to its inspection teams. 

Instead, it has been the norm to rely on an English-speaking representative of the foreign establishment 

being inspected, rather than an independent translator. 

Finally, GAO has indicated that FDA has faced certain logistical and staffing challenges unique to 

conducting foreign inspections. To address these concerns, the FDA has established foreign offices in 

Beijing, Shanghai, and Guangzhou, comprised of a total of eight FDA employees and five Chinese 

nationals in late 2008. The branch office in Beijing is primarily responsible for coordination between FDA 

and the Chinese regulatory agencies. The branches located in Shanghai and Guangzhou are supposedly 

focused on conducting inspections and working with Chinese inspectors to provide training as necessary. 

FDA has noted that the Chinese nationals primarily provide support to FDA staff, including translation and 

interpretation. It is hoped that these new FDA branches in Beijing, Shanghai, and Guangzhou will address 

these concerns more effectively.61

GAO testified in November 200762 that FDA’s databases do not provide an accurate count of foreign 

establishments subject to inspection and do provide widely divergent counts. According to their findings, 

through one recent initiative the FDA has taken steps to improve its database intended to include foreign 

establishments registered to market drugs in the United States. This initiative may reduce inaccuracies in 

FDA’s count of foreign establishments. However, these steps will not prevent foreign establishments that 

do not manufacture drugs for the U.S. market from erroneously registering with FDA. Further, to reduce 

duplication in its import database, FDA has supported a proposal that would change the data it receives 

on products entering the United States. However, the implementation of this proposal is not certain and 

would require coordination with multiple federal agencies. Efforts to integrate these databases have the 

potential to provide FDA with a more accurate count of establishments subject to inspection, but it is too 

early to tell. One immediate consideration could possibly call for increased accountability, when 

applicable, for the ‘Agent’ of the DMF Holder. This would hold the third party more responsible for 

accuracy, validity, and veracity of the submitted information. 

The GAO’s testimony also addressed gaps in the information technology infrastructure that weakens the 

processes for prioritizing the inspection of foreign establishments that pose the greatest risk to public 

health. While FDA recently expressed interest in obtaining useful information from foreign regulatory 

bodies that could help it prioritize foreign establishments for inspections, the agency has faced difficulties 

fully utilizing these arrangements in the past. For example, FDA had difficulties in determining whether 

the scope of other countries’ inspection reports met its needs and these reports were not always readily 

available in English.63

 

60 United States Government Accountability Office GAO Testimony Before the Subcommittee on Oversight and 

Investigations, Committee on Energy and Commerce, House of Representatives; 

Preliminary Findings Suggest Recent FDA Initiatives Have Potential, but Do Not Fully Address Weaknesses in Its 

Foreign Drug Inspection Program, April 22, 2008, United States Government Accountability Office GAO Report to 

Congressional Requesters; 

Better Data Management and More Inspections Are Needed to Strengthen FDA’s Foreign Drug Inspection Program, 

September 2008, United States Government Accountability Office; 

GAO Testimony Before the Subcommittee on Oversight and Investigations, Committee on Energy and Commerce, 

House of Representatives-Preliminary Findings Suggest Weaknesses in FDA’s Program for Inspecting Foreign Drug 

Manufacturers, Thursday, November 1, 2007 

61 ‘FDA Seeks to establish Branch Office in China’ Genetic Engineering & Biotechnology News September 1, 2008, 

Volume 28, Number 15; ‘FDA outlines ‘best practice’ for importers’ January 21, 2009; ‘FDA launches global supply 

chain pilot scheme’ January 15, 2009, www.outsourcing-pharma.com 62 GAO Testimony Before the Subcommittee on Oversight and Investigations, Committee on Energy and Commerce, 

House of Representatives-Preliminary Findings Suggest Weaknesses in FDA’s Program for Inspecting Foreign Drug 

Manufacturers, Thursday, November 1, 2007 

63 Ibid 
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FDA inspects relatively few foreign establishments each year to assess the manufacturing of drugs 

currently marketed in the United States. From fiscal years 2002 through 2007, the FDA inspected 1,479 

foreign drug manufacturers. Because the FDA does not know the number of establishments subject to 

inspection, the percentage of those inspected cannot be calculated with certainty. As the FDA plans 

additional inspections, it is important that it ensures that foreign and domestic establishments with similar 

characteristics are inspected at a similar frequency.64

In March 2009, another piece of legislation was introduced in Congress, S.525: Pharmaceutical Market 

Access and Drug Safety Act of 2009, which amends the Federal Food, Drug, and Cosmetic Act (FDCA) to 

revise provisions governing the importation of prescription drugs.65 It is worth noting that China is the 

world’s largest supplier of key ingredients for many pharmaceutical products to several of the countries 

identified in the bipartisan bill – Japan and Europe (Germany, Spain, Italy, Belgium, France, Netherlands - 

see Table 4). Backlash against proposed legislation has begun, with the Pharmaceutical Research 

Manufacturers of America (PhRMA), among others, publicly opposing the legislation based upon the 

acknowledged worldwide threat of counterfeit products.66 

Notwithstanding this potential significant challenge to U.S. pharmaceutical research and biotechnology 

companies, many of these same drug manufacturers continue to increase the pace of outsourcing many 

R&D functions of the drug discovery and development process, as well as FDA required clinical trial 

obligations, to China in pursuit of reduced costs. 

It is conceivable to believe the prospect of enormous lost profits to Big Pharma is a very compelling 

financial motivator to PhRMA, as has been suggested by Senator Byron Dorgan, the primary sponsor of 

the bipartisan legislation that the Congressional Budget Office (CBO) estimates would save American 

consumers $50 billion over the next decade, including more than $10 billion in federal government 

savings67. These estimates from the CBO are based upon a prior report ordered by the Senate 

Committee on Commerce, Science, and Transportation Congress on Senate Bill 1392 (S.1392) – Federal 

Trade Commission (FTC) Reauthorization Act of 2005, which would have authorized funding for the FTC 

through 2010. Legislation S. 1392 also proposed amendment to the Federal, Food, Drug, and Cosmetic 

Act (FDCA) to modify provisions governing the importation of prescription drugs to the United States – 

similar to the current proposed legislation – S. 525.68 

Dietary Supplements

For the purpose of this report, it is recognized that in the U.S., a “dietary supplement” may be either a 

nutritional or food supplement; therefore “supplements” will be used, unless otherwise stated. 

Supplements as defined under the Dietary Supplement Health and Education Act of 1994 (DSHEA)69 are 

products which supplement diet and contains one or more of the following ingredients: vitamins, minerals, 

fatty acids or amino acids. This contrasts with China’s regulatory system, which treats supplements as 

drugs. 

Historically, the regulation of dietary supplements has been a significant challenge for the Food and Drug 

Administration (FDA), which has only limited authority to regulate safety and no pre-market approval 

authority. The regulatory authorities applicable to dietary supplements are more analogous to that of 

 

64 Better Data Management and More Inspections Are Needed to Strengthen FDA’s Foreign Drug Inspection Program, 

September 2008, United States Government Accountability Office 

65http://www.govtrack.us/congress/bill.xpd?bill=s111-525 

66Bill could cripple FDA and harm patients; PhRMA by Nick Taylor, 12-Mar-2009 http://www.outsourcing-pharma.com; 

PhRMA Statement on Prescription Drug Importation, Washington, D.C. (July 10, 2009) 67 Re-importation bill would punish big pharma’s actions; Dorgan by Nick Taylor, 11-Mar-2009, 

http://www.outsourcing-pharma.com 

68 http://www.cbo.gov/doc.cfm?index=6634&type=0 

69 Dietary Supplement Health and Education Act of 1994 Public Law 103-417, 103rd Congress 
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foods than drugs.70 This is a considerable issue given that nearly 150 million Americans use dietary 

supplements annually. The size of the market has increased dramatically since the passage of the 

Dietary Supplement Health and Education Act (DSHEA) and is continuing to grow, presumably in part 

because of the lack of pre-marketing regulatory hurdles and exploding customer demand. As of 2005, the 

dietary supplement industry in the U.S. was a $21.4 B business71 reflecting more than 29,000 dietary 

supplement products on the market.72 Figure 4 represents the top U.S. Nutrition Industry Supply 

Companies in 2008 based on sales.

 

70 ‘A Hard Pill To Swallow: Barriers to Effective FDA Regulation of Nanotechnology-Based Dietary Supplements’ 

January 2009 William B. Schultz, Lisa Barclay, Project on Emerging Nanotechnologies 71“Fact Sheet–Dietary Supplements: Safe, Beneficial, and Regulated,” Council for Responsible Nutrition. Available at 

http://www.crnusa.org/pdfs/CRN_FACT_DSSafeRegulatedBeneficial_07.pdf. 72 Ibid 
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Figure 4: Top U.S. Nutrition Indu stry Supply Companie s in 2008 * 

Supply U.S. Raw Material s 

Companies Sa le s Ran ge ($mi l)

DSM Nutritional Products $250 - 300 

BASF $250 - 300 

Glanbia Ingredients $150 - 200 

Cargill $150 - 200 

Martek Biosciences $150 - 200 

Century Foods International $150 - 200 

Solae $150 - 200 

ADM $100 - 150 

Kaneka Nutrients L.P. $100 - 150 

Pronova $100 - 150 

Cognis $100 - 150 

Protient $50 - 100 

Ocean Nutrition $50 - 100 

WILD Flavors Inc. $50 - 100 

Kerry $50 - 100 

Fortitech $50 - 100 

Naturex $50 - 100 

Bioriginal $50 - 100 

BI Nutraceuticals $50 - 100 

Balchem $50 - 100 

Stauber Performance Ingredients $50 - 100 

LycoRed Natural Products $50 - 100 

Sensus $30 - 50 

Dynamic Nutrition $30 - 50 

Sunrich (SunOpta) $30 - 50 

Danisco $30 - 50 

Nutrition 21 $30 - 50 

Wright Nutrition $30 - 50 

Maypro $30 - 50 

P.L Thomas $30 - 50 

Purac $30 - 50 

JM Huber $30 - 50 

ZMC-USA $30 - 50 

Kantno Innovative Food Ingredients $30 - 50 

GTC Nutrition $30 - 50 

InterHealth Nutraceuticals Inc. $30 - 50 

Davisco $30 - 50 

Beneo-Orafti $30 - 50 

Zila Nutraceuticals $30 - 50 

Gadot Biochemical Industries $30 - 50 

Pharmore Ingredients $30 - 50 

Omya $30 - 50 

Main Street Ingredients $30 - 50 

Kingchem $30 - 50 

Loders Croklaan $30 - 50 

Jiangsu Jianshan Pharma $30 - 50 

Pharmachem $30 - 50 

Source: Nutrition Busines s Journal dat aba se of raw material & ingred ient suppliers. Revenues 

listed are U.S. nutrition i nd ustry ra w material an d ingred ient sales only. *All revenues are 

approximations of 20 08 sales that have been compiled from executives, industry analysts and 

pub lished ma terials . Althou gh NBJ has made every reaso nab le effort to be accurate, revenue figures 

are not t he result of audits an d the refore not guaranteed to be an accura te representation. 

Estimates are current a s of 12/4/ 2008. Errors and omissio ns are unin tentio nal. 
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Given this backdrop, and in light of the limited regulatory authority that Congress has granted it over 

these products in the DSHEA, FDA faces significant challenges:73

1. Dietary supplements may be marketed to the public even though FDA has not reviewed studies and 

other information and before the agency has determined whether these products have met the statutory 

safety standard. 

2. In order to remove a dietary supplement (other than a new dietary ingredient) from the market, FDA 

must demonstrate that the product presents “a significant or unreasonable risk of illness or injury.”74

3. When FDA compiles an administrative record to support a regulatory action, the courts ordinarily will 

give deference to the agency’s decision and will not overturn that decision unless it is arbitrary and 

capricious. However, in the case of dietary supplements, the court must review the scientific 

determination de novo, giving no deference to FDA’s decision. 

As one clear example, in the high-profile case of ephedrine alkaloids, FDA took nearly seven years to 

remove dietary supplements containing ephedra from the market. By this time, hundreds of reports of 

serious illness from the use of ephedra-containing products had raised safety concerns.75 Under DSHEA, 

dietary supplements may be marketed to millions of consumers even after safety concerns have been 

raised, unless FDA can demonstrate that they are associated with a significant or unreasonable risk of 

illness or injury, as demonstrated in the following: 

“As early as 1994, FDA began receiving reports of adverse events associated with the use 

of ephedra. 

 FDA first proposed regulating ephedra in 1997, but many of those who commented on that proposal, 

including the U.S. General Accounting Office, believed that FDA had not developed sufficient evidence to 

support its proposed actions. 

 In 2003, after reviewing peer-reviewed scientific literature, thousands of adverse event 

reports and the conclusion of a study by the RAND corporation reporting “more than 

16,000 adverse events associated with the use of ephedra-containing dietary supplements, 

including heart palpitations, tremors and insomnia,” FDA reopened the comment period on its 1997 

proposed rulemaking on ephedra products. 

 In December 2003, FDA issued a press release recommending that consumers stop buying and 

using ephedra. FDA banned the sale of dietary supplements containing ephedra in April 2004, when it 

issued a final rule concluding that such products presented an unreasonable risk of illness or injury. 

 Dietary supplement manufacturers challenged the ban, but it was upheld by theTenth Circuit Court of 

Appeals in 2006. In 2007, the Supreme Court declined to review the ruling.”76

DSHEA also provided FDA with limited pre-market review authority for “a new dietary ingredient for which 

there is inadequate information to provide reasonable assurance that such ingredient does not present a 

 

73 See note 70, 71 74 21 U.S.C. § 342(f )(1)(A). 75 Sources: http://www.npr.org/templates/story/story.php?storyId=850679, http://www.cfsan.fda.gov/~dms/ dsephe2.html, http://www.fda.gov/oc/initiatives/ephedra/february2004/ See note 60 

76 Ibid 
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significant or unreasonable risk of illness or injury.” 77 Dietary ingredients are considered to be “new” if 

they were not marketed in the United States prior to October 15, 1994, the date DSHEA was enacted.78

DSHEA also provided FDA with the authority to issue regulations on Good Manufacturing Practices 

(GMP).79 Issued in 2007, the GMP regulations for dietary supplements are intended to establish process 

controls that can minimize the likelihood of problems and variances in manufacturing as they occur in 

order to ensure that dietary supplements are manufactured, packaged, held and labeled in a consistent 

and reasonable manner. FDA has the authority to find a dietary supplement product adulterated if the 

manufacturer does not comply with GMP regulations. 

Key elements of this Dietary Supplement GMP rule include: 

1) Relevant only to dietary supplements, and not to dietary ingredients. This is a more narrow scope than 

was addressed in FDA’s proposed rule in 2003. 

2) Rule is relevant to all dietary supplements sold or offered for sale in the United States, so that even 

foreign firms will be required to meet the new manufacturing standards. 

3) Every dietary ingredient used in a dietary supplement will be required to meet “100-percent identity 

testing,” such that manufacturers will be required to “conduct at least one appropriate test or examination 

to verify the identity of any component that is a dietary ingredient.” Manufacturers will also be required to 

“confirm the identity of other components.” 

It has been well documented that resource and financial constraints impede the FDA’s capability to 

regulate dietary supplements. Add to this scenario the incorporation of widespread and unregulated raw 

materials sourced from China into many dietary supplements, and there remains great concern on this 

matter. The FDA report “Science and Mission at Risk: Report of the Subcommittee on Science and 

Technology” (Science Board Subcommittee Report), in November 200780 concluded that FDA cannot 

fulfill its mission because its scientific base has eroded, its scientific workforce does not have sufficient 

capacity and capability, and its information technology infrastructure is inadequate,81 which reaffirms prior 

GAO findings. 

The report also addressed resources available for the regulation of dietary supplements, which are the 

responsibility of the Office of Nutritional Products, Labeling, and Dietary Supplements in the Center for 

Food Safety and Applied Nutrition (CFSAN).82 The CFSAN office regulating dietary supplements has 

seen a dramatic reduction in resources in recent years. 

In addition to its responsibility for monitoring the nation’s food supply, the office is also in charge of: 

1) Reviewing pre-market notifications and information submissions (91 new dietary ingredient notifications 

in FY 2007);83

 

77 21 U.S.C. § 342(f )(1)(B) 78 21 U.S.C. § 350b(c) 79 21 U.S.C. § 342(g)(2). While DSHEA gave FDA the authority to issue GMP regulations for dietary supplements 

when it was passed in 1994, FDA did not issue final regulations on GMPs until 2007; 

http://www.fda.gov/Food/DietarySupplements/GuidanceComplianceRegulatoryInformation/RegulationsLaws/ucm110

858.htm 

80 “FDA Science and Mission at Risk: Report of the Subcommittee on Science and Technology,” U.S. Food and Drug 

Administration. available at http://www.fda.gov/ohrms/dockets/AC/07/briefing/2007-

4329b_02_01_FDA%20Report%20on%20Science%20and%20Technology.pdf. 

81 FDA Science and Mission at Risk: Report of the FDA Science Board’s Subcommittee on Science and Technology. 

Estimated Resources Required for Implementation, Gail Cassell, Ph.D., on behalf of the Subcommittee and its 

members. February 25, 2008. at p. 7. available at: http://energycommerce. 

house.gov/Press_110/022508.ScienceBoardReport. EstimatedResources.pdf 82 www.fda.gov/AboutFDA/CentersOffices/CFSAN/default.htm 83 See Narrative accompanying FDA Foods Program Resources Table for FY 2009 FDA Budget, 

available at http://ww.fda.gov/oc/oms/ofm/budget/2009/toc.htm. 
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2) Checking health claims and promotional materials (more than 2500 structure/ function claims 

notifications in FY 2007);84 and 

3) Monitoring adverse event reports. 

China Effect 

It is reported that China has come to dominate the vitamin raw material market over the last decade, 

controlling approximately one third of the world’s vitamin production. To demonstrate China’s emergence 

as a powerful force in the supply industry, the following charts of percentage of Vitamin Raw Materials 

imported from China for years 2001 to 2007 reflect this: 

Sales of Raw Materials Imported From China by Individual Letter Vitamin 

2001-2007 

Supply from China % 2001 2002 2003 2004 2005 2006 2007

Vitamin C 55% 60% 61% 65% 75% 80% 92% 

Vitamin E 15% 20% 21% 30% 35% 42% 40% 

B Vitamins 40% 42% 45% 50% 55% 63% 65% 

Vitamin A 15% 17% 17% 20% 32% 27% 26% 

Other/Pre-Mixes 37% 36% 38% 42% 47% 59% 60% 

Source: Nutrition Business Journal estimates derived from supply company surveys and interviews with executives. 

 

84 Ibid 
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Final Considerations and Recommendations 

Beginning in 2007, China overtook Canada to become the largest source of total U.S. imports (~$322 B); 

with just over 16% of total U.S. imports.This trend has continued up to November 2009, in which, 

according to US trade data, China has captured ~19% of all imports. Based on US trade data normalized 

for uncompounded medicinal chemicals and their derivatives (i.e., generally for use by pharmaceutical 

preparation manufacturers), the estimated percentage of raw ingredients used in pharmaceuticals and 

supplements imported from China has gradually increased from ~2.6% to ~4.5% from 2006 to 2009 (YTD 

November) based on China’s exports of uncompounded medicinal chemicals and their derivatives 

[NAICS code]. Taking into consideration the different defining methodologies for categorizing API, 

pharmaceuticals, etc. the underlying assumption for our analyses are that raw ingredients of 

pharmaceuticals and vitamins are classified under this code. Separately, our research analysis suggests 

that the U.S. relies quite heavily on Chinese suppliers for a number of imports of raw ingredients used in 

consumer healthcare treatments: heparin-related products, Vitamin products and their derivatives, 

acetaminophen, ibuprofen, and even acetosalicylic acid (ordinary Aspirin), all of which are in the top 25 of 

API exports to the U.S. One would expect this trend to continue with additional exports in the future. 

In recent years, there have been numerous recalls and warnings issued by U.S. firms over various 

products imported from China due to health and safety concerns as outlined in this report. This has led 

many U.S. policymakers to question the adequacy of China’s regulatory environment in ensuring that its 

exports to the United States meet U.S. standards for health, safety, and quality; as well as the ability of 

U.S. government regulators, importers, and retailers to identify and take action against unsafe imports 

(from all countries) before they enter the U.S. market. 

Many reports, publications, and public testimonies assert that China’s health and safety regime for export 
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products is fragmented and ineffective. The impediments are many: poorly enforced regulations, lack of 

inspections and ineffective penalties for code violators, underfunded and understaffed regulatory 

agencies and suspect interagency cooperation, the proliferation of fake goods and ingredients, the 

existence of numerous unlicensed producers, falsified export documents, intense business competition 

that often induces firms to cut corners, failure by Chinese companies to closely monitor the quality of their 

suppliers’ products, government corruption and lack of accountability, especially at the local level. 

Chinese officials contend that most Chinese-made products are safe and note that U.S. recalls for health 

and safety reasons have involved a number of countries (as well as U.S. products). However, they have 

acknowledged numerous product health and safety issues. 

Although it lies beyond the scope of this report, the counterfeiting of pharmaceuticals and supplements 

remains rampant, and poses special concerns for consumer health and safety. The United States notes 

its concern with the proliferation of the manufacture of counterfeit pharmaceuticals in China, among other 

countries, and the sale and distribution of counterfeit pharmaceuticals in many countries. A significant 

contributing factor in this problem is the unauthorized use of bulk active pharmaceutical ingredients (APIs) 

to manufacture counterfeit pharmaceuticals. For instance, in China, domestic chemical manufacturers 

that produce APIs can avoid regulatory oversight by not declaring that the bulk chemical is intended for 

use in pharmaceutical products. While China has acknowledged that this loophole must be addressed 

and has committed to expanding its regulations to control bulk chemicals used as the underlying source 

of many counterfeit drugs, the Office of the U.S. Trade Representative continues to urge China to adopt 

policies that will reduce the manufacture and distribution of unauthorized APIs. 

Concerns over the health, safety, and quality of Chinese products could have a number of important 

economic implications. Relatively recently, both the United States and China have accused each other of 

using health and safety concerns as an excuse to impose protectionist measures, as reported in the case 

of imported drywall, and already some observers contend that similar issues of this nature could lead to 

growing trade friction between the two sides. 

Interestingly, these international concerns over the safety of Chinese exports have not yet diminished the 

attractiveness of China as a destination for foreign investment in export-oriented manufacturing, including 

the U.S. pharmaceutical industry, as well as for other foreign firms that contract with Chinese firms to 

make and export other products under their labels (such as toys). China is engaged in ongoing efforts to 

restore international confidence in the health and safety of its exports through increased inspections, 

certification requirements, mandatory testing, etc., as evidenced by the high-level cooperative agreement 

between the U.S. Department of Health and Human Services and China’s regulatory agencies. 

The Food and Drug Administration (FDA), an agency within the Department of Health & Human Services 

(HHS), oversees the safety and effectiveness of human drugs and dietary supplements marketed and 

sold in the United States. Longstanding concerns regarding the capacity and capabilities of the FDA’s 

foreign drug inspection program were brought to a new level and seriously debated in 2008 when 

heparin, a common blood thinner widely used by kidney-dialysis and post-surgical patients to prevent 

clots, and which was the cause of 81 U.S. fatalities,85 was processed in China. Selected members of 

Congress have been fully informed and notified of the current situation and its potential consequences. In 

response to the increased outcry in the public arena, the FDA has launched initiatives to improve its 

Foreign Drug Inspection Program. The “Beyond our Borders” initiative focuses on international 

collaboration, building new systems, and working more closely with industry.86 The agency is also 

enhancing information technology capabilities. In 2008, the agency received the green light from the State 

Department to create eight full-time FDA positions in China and announced it is hiring five local Chinese 

nationals as inspectors. On November 19, 2008, the first overseas office opened in Beijing, China 

 

85 ‘New Data Link Heparin Deaths to Chinese Batches, FDA Says’, Washington Post, Tuesday April 22, 2008; 

‘Heparin’s Deadly Side Effects’ Time/CNN Thursday, November 13, 2008, etc. 

86 Investigations – Broken Government FAILURE: LACK OF ADEQUATE FOREIGN DRUG OVERSIGHT; FAILURE: 

FDA FAILURE TO ENSURE DRUG SAFETY; The Center for Public Integrity, 

http://www.publicintegrity.org/investigations/broken_government/; ‘FDA Seeks to establish Branch Office in China’ 

Genetic Engineering & Biotechnology News September 1, 2008, Volume 28, Number 15; ‘FDA outlines ‘best practice’ 

for importers’ January 21, 2009; ‘FDA launches global supply chain pilot scheme’ January 15, 2009, 

www.outsourcing-pharma.com 
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primarily responsible for coordination between FDA and the Chinese regulatory agencies: the State Food 

and Drug Administration and the Administration of Quality Supervision, Inspection and Quarantine. The 

branches located in Shanghai and Guangzhou are reportedly structured to focus on conducting 

inspections, and working with Chinese inspectors to provide training as necessary. As reported 

previously, the GAO, outside experts, non-partisan agencies, and other concerned constituents have put 

forth and made public to members of Congress many fundamental recommendations for consideration 

and implementation. 

Aside from internal distractions relating to perceived point of conflict arrangements, collaborations, poor 

morale, frequent scandals and other impeding factors, it is believed both in and outside the agency that 

the FDA has reached (or is extremely close to approaching) a breaking point.87 It has been argued, with 

increasing momentum, that a complete segregation of the responsibilities of the FDA should be seriously 

evaluated.88 As a leading member in Congress, Representative John Dingell, Chairman Emeritus of the 

House Committee on Energy and Commerce and the sponsor of the Food and Drug Globalization Act of 

2009, has said, “You’ve got an agency that quite frankly is either non-functional, or dysfunctional, or 

maybe all of the above”.89 Another Congressional leader on FDA reform, Ranking Member of the Senate 

Committee on Finance Senator Chuck Grassley of Iowa, has also expressed profound concerns about 

frequent failures of management responsibilities and oversight, and personnel staffing at the Center for 

Drug Evaluation and Research (CDER).90 

To address weaknesses in FDA's oversight of foreign establishments manufacturing drugs for the U.S. 

market, the Commissioner of FDA should: 

• Require that establishments manufacturing drugs for the U.S. market update their 

registration annually. 

• Explore a move towards increased accountability in DMF submissions, when applicable, 

for the “Agent” of the DMF Holder. This would distribute the responsibility for accuracy, 

validity, and veracity of the submitted information. 

• Establish mechanisms for verifying information provided by the establishment at the time 

of registration. 

• Ensure that information on the classification of inspections with serious deficiencies is 

accurate in all FDA databases. 

• Conduct more inspections to ensure that foreign establishments manufacturing drugs 

currently marketed in the United States are inspected at a frequency comparable to 

domestic establishments with similar characteristics. 

• Perform timely inspections of foreign establishments that have received warning letters to 

determine continued compliance. 

• Continue to make the case to Congress regarding the urgency of providing FDA with the 

resources necessary to properly regulate dietary supplements, and to improve IT 

infrastructure capabilities for better coordination. 

 

87 ‘Food safety system near “breaking point”:FDA’ Christopher Doering, Tuesday March 18th, 2008 Reuters.com 88‘FDA Behind in Food Safety Audits’ May 19th, 2009 NEWSInferno.com; ‘PROMISES, PROMISES: FDA lags in food 

safety audits’, Mary Clarke Jalonick AP Writer, May 18th, 2009 salon.com 89 ‘Is The FDA a broken agency?’ Critics: Tainted peanuts, peppers, blood thinner highlight need for overhaul; 

AP March 3, 2009, MSNBC.com; 

90‘Senator slams FDA “mismanagement”’ Nick Taylor November 6th, 2008, 

http://www.inpharmatechnologist.com/Industry-Drivers/Senator-slams-FDA-mismanagement