China’s New ‘Good Supply Practice of Pharmaceutical Products’ to Take Effect

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May 22 – China’s “Good Supply Practice of Pharmaceutical Products,” issued in 2000, has played an important role in regulating pharmaceutical operation activities and ensuring drug quality and safety over the past decade. However, with the country’s rapid economic and social development in recent years, some provisions of the current Good Supply Practice of Pharmaceutical Products have fallen behind the times, and are therefore hindering the healthy development of the pharmaceutical industry.

In response, China’s State Food and Drug Administration (SFDA) started revising the Good Supply Practice of Pharmaceutical Products in 2009 and now, after three rounds of public consultation, China’s Ministry of Health (MOH) at last released the newly-revised “Good Supply Practice of Pharmaceutical Products (MOH Decree No. 90, hereinafter referred to as ‘Revised GSP Standards’)” on January 22, which is scheduled to take effect on June 1, 2013.

The Revised GSP Standards contain the following 4 chapters:

  • General provisions
  • Quality management for wholesale of pharmaceutical products
  • Quality management for retail of pharmaceutical products
  • Supplementary provisions

Key features of the Revised GSP Standards can be found below.

Establishing higher standards for quality control in drug distribution

According to the Revised GSP Standards, pharmaceutical wholesalers and retailers are required to establish a comprehensive quality control system, dedicate qualified quality management personnel to handle quality control matters, and conduct internal audits periodically.

The Revised GSP Standards also require pharmaceutical wholesalers and retailers to establish a computerized system to monitor their entire course of operation and ensure product traceability. Such entities shall be equipped with relevant network devices and shall maintain an electronic database and relevant software applications.

Establishing higher standards for supply chain management

The Revised GSP Standards require pharmaceutical wholesalers and retailers to adopt an automatic temperature and humidity monitoring system for drug warehousing, and where a third party has been entrusted with drug transportation, the entrusting party shall examine the transportation capabilities and relevant quality assurance ability of the third party.

Imposing stricter record-keeping and tracking requirements

According to the Revised GSP Standards, sales and purchases of pharmaceutical products need to be supported by consistent accounting records and official invoices, and such products must be accompanied by matching records throughout the entire distribution chain.

The SFDA has granted a three-year grace period for the implementation of the Revised GSP Standards. Enterprises that fail to meet the requirements of the Revised GSP Standards upon the expiry of such grace period will have their pharmaceutical operation activities suspended in accordance with the Drug Administration Law.

One of the objectives of the Revised GSP Standards is to accelerate the consolidation of the country’s pharmaceutical distribution sector. Currently, there are about 13,000 drug wholesalers and 420,000 retailers in China. The Revised GSP Standards are expected to help reduce low-level repetitive development and promote market concentration. A large number of small-scale distributors with insufficient resources to upgrade their facilities and management systems in order to meet the new requirements are likely to be forced out of the market.

Dezan Shira & Associates is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in emerging Asia. Since its establishment in 1992, the firm has grown into one of Asia’s most versatile full-service consultancies with operational offices across China, Hong Kong, India, Singapore and Vietnam as well as liaison offices in Italy and the United States.

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