Part 4a: The Pharmaceutical Industry Relies Heavily On Sourcing From India & China – China Segment
Special Focus: The Environment as a Risk To The Supply Chain
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Security Of The Pharmaceutical Supply Chain Part 4a: The Pharmaceutical Industry Relies Heavily On Sourcing From India & China – China Segment
1. Security Of The Pharmaceutical Supply Chain
A Series Of Informative Disquisitions
This Installment:
Part 4a: The Pharmaceutical Industry Relies Heavily
On Sourcing From India & China – China Segment
Special Focus: The Environment as a Risk To The Supply Chain
4. Pharmaceutical Sourcing From India &
China
• Approximately 80% of Active Pharmaceutical Ingredients
(API) and 40% of finished drugs used in the United States are
imported.
• Today, Americans rely entirely on imported antibiotics
because no domestic firm produces a single dose
Texas International Law Journal, Volume 48, Issue 1
N.Y. Times (Jan. 19, 2009)
“The lack of regulation around outsourcing is a blind spot that leaves
room for supply disruptions, counterfeit medicines, even
bioterrorism” - Senator Sherrod Brown, of Ohio
5. • According to FDA, between 2010 and 2015, the total number of import lines
regulated by the FDA has increased by more than 50 percent:
- 2010 – 21 million import lines
- 2015 – 35 million import lines
• Today, more than 85% of Active Pharmaceutical Ingredients are
manufactured overseas with a large constituent coming from the third
world.
Pharmaceutical Sourcing From India &
China
• Chinese companies now account for more than 50% of the global active
pharmaceutical ingredient (API) market.
• Recently, China produced $25.7 billion worth of bulk drugs (up 23 percent), and
exported $17.6 billion of that output (an increase of 30 percent).
The Economic Times: Pharmaceuticals, Sep 28, 2017
Bloomberg News, August 29, 2016,
9. Pharmaceutical Sourcing From China
Dr. Yusuf K. Hamied, chairman of Cipla:
“If tomorrow China stopped supplying pharmaceutical
ingredients, the worldwide pharmaceutical industry would
collapse”
N.Y. Times (Jan. 19, 2017)
Enrico Polastro, drug industry consultant:
“If China ever got very upset with President Trump, it could be a
big problem.”
10. • According to an Oct 2014 report by a Boston Consulting Group
(BCG), more than 90 percent of the key raw materials
(intermediates and APIs) that go into making at least 15 essential
drugs come from China.
• The drugs listed include paracetamol, amoxicillin ampicillin,
cephalexin, cefaclor, ciprofloxacin, ofloxacin, levofloxacin,
metformin, and ranitidine.
Manufacturing & Technology News, May 18 2010, Volume 17, No. 8
Pharmaceutical Sourcing From China
12. In 2007, Chinese producers had deliberately adulterated pet food with melamine, a
chemical usually used to make plastics
• Approximately 17,000 consumers complained their pets were injured after
eating Chinese-made pet food
• As a result, more than 2,000 dogs died
N.Y. Times - March 31, 2007
Also in 2007, Chinese-made toothpaste sold in Miami and other cities contained
a toxic chemical agent
• The FDA estimated that over $3 million worth of toothpaste in the U.S.
market was imported from China
• In the same year, Chinese-made toys were found to contain high levels of
lead
N.Y. Times June 2, 2007
Mr. Zheng Xiaoyu, Director of the the SFDA, was sentenced to
death for corruption and dereliction of duty.
Pharmaceutical Sourcing From China
13. Huayuan, one of the first drug makers to receive GMP certification from the
SFDA
• In 2006, 100 patients across sixteen provinces became violently ill after
receiving injections of Clindamycin
• Investigation uncovered violated GMP standards in the production process
to curb costs.
Qiqihar No. 2 Pharmaceutical received GMP certification from the SFDA in
2005
• Thirteen patients died in Guangzhou after receiving Armillarisni A made by
Qiqihar
• Mr. Guo Xingping, deputy general manager, testified that the company
obtained GMP certification by paying ¥10,000 ($1,566)
Xinjing Daily - Aug. 16, 2006
SOHU - Aug. 9, 2007
Pharmaceutical Sourcing From China
14.
15. Zhejiang Hisun Pharmaceutical - January, 2017
1.) Data integrity violations more than three months after banning the company’s
products from entering the US.
2.) Failing to stop unauthorized access or changes to company data
3.) Failing to provide adequate controls to prevent the manipulation and omission of
data
Suzhou Pharmaceutical Technology Co.,Ltd January, 2017
1.) Failure to transfer all quality or regulatory information received from the API
manufacturer to customers
2.) Failure to have a quality unit responsible for reviewing and approving quality-
related documents, including Certificates of Analysis.
3.) Failure to have facilities suitable for the storage of all materials under
appropriate conditions.
16. Sato Kogyo Co., Ltd. January 2017
1.) Failed to ensure that laboratory records include complete data derived
from all tests necessary to assure compliance with established specifications
and standards
2.) Failed to thoroughly investigate any unexplained discrepancy or failure
of a batch its components to meet specifications
Chongqing Pharma Research Institute Co., Ltd. February 2017
Failure to maintain complete data derived from all laboratory tests conducted to
ensure compliance with established specifications and standards.
17. Cixi Zhixin Bird Clean-Care Product Co., Ltd. 1/6/17
1.) Quality control unit failed to review and approve all drug product production and
control records, including those for packaging and labeling
2.) Does not have, for each batch of drug product, appropriate laboratory determination
of satisfactory conformance to final specifications for the drug product
3.) Failed to establish and follow a written testing program designed to assess the
stability characteristics of drug products
4.) Failed to establish and follow written procedures to assure batch uniformity and
integrity of drug products
18. 1.) Failed to thoroughly investigate unexplained discrepancy or failure of a batch or
its components to meet specifications
2.) Failed to establish and follow written procedures, designed to prevent
microbiological contamination in drug products purporting to be sterile
3.) Failure to establish and follow change controls to evaluate all changes that
could affect the production and control of intermediates or API.
Porton Biopharma Limited 1/17/17
Teva Pharmaceutical and Chemical (Hangzhou) Co. Ltd. 4/5/17
1.) Failure to establish written procedures to monitor the progress and control
the performance of processing steps that may cause variability in the quality of
the API.
2.) Failure to establish a sampling plan based on scientifically-sound sampling
practices.
19. Zhejiang Bangli Medical Products Co., Ltd 1/26/17
1.) Does not have, for each batch of drug product, appropriate laboratory
determination of conformance to final specifications for the drug product
2.) Failed to test samples of each component for conformity with all appropriate
written specifications for purity, strength, and quality
3.) Failed to establish and follow written procedures for cleaning and maintenance of
equipment
4.) Failed to establish written procedures to prevent mix-ups and cross
contamination by physical or spatial separation from operations on other drug
products
20. Jinan Jinda Pharmaceutical Chemistry Co., Ltd. 2/24/17
1.) Failure of quality unit to ensure the API manufactured are in compliance
with CGMP, and meet established specifications for quality and purity.
2.) Failure to adequately investigate out-of-specification results.
3.) Failure to prevent unauthorized access or changes to data, and failure to
provide adequate controls to prevent omission of data.
Shandong Analysis and Test Center 6/22/17
1.) Failure to ensure that test procedures are scientifically sound and
appropriate to ensure that APIs conform to established standards of quality
and/or purity.
2.) Failure to prevent unauthorized access or changes to data, and to provide
adequate controls to prevent manipulation and omission of data.
21. Qinhuangdao Zizhu Pharmaceutical, Co. 4/24/17
1.) Failure to prevent unauthorized access or changes to data, and failure to provide
adequate controls to prevent omission of data.
2.) Failure to maintain complete data derived from all laboratory tests conducted to ensure
compliance with established specifications and standards.
3.) Failure of the quality unit to ensure the APIs manufactured are in compliance with
CGMP, and meet established specifications for quality and purity.
1.) Failed to ensure that laboratory records included complete data derived from all
tests necessary to assure compliance with established specifications and
standards
2.) Failed to establish an adequate quality control unit
3.) Failed to clean, maintain, and sterilize equipment to prevent malfunctions or
contamination that would alter the safety, identity, strength, quality, or purity
Shandong Vianor Biotech Co., Ltd. 9/12/17
22. Changzhou Jintan Qianyao Pharmaceutical Raw Materials
5/11/17
1.) Failure to implement a quality system for organizational structure,
procedures, and processes
2.) Failure to define and document all quality-related activities.
3.) Failure to have written procedures for the receipt, identification, quarantine,
storage, sampling, testing, handling, and approval or rejection of raw materials.
4.) Failure to have laboratory control records that include complete data derived
from all laboratory tests conducted to ensure compliance with established
specifications and standards.
5.) Failure to prepare adequate batch production records and record the
activities at the time they are performed.
23. Foshan Flying Medical Products Co., Ltd. 8/1/17
1.) Failed to establish an adequate quality control unit and procedures to approve
or reject all components
2.) Failed to perform, for each batch of drug product, appropriate laboratory
determination of conformance to final specifications for the drug product
3.) Failed to have, for each batch of drug product purporting to be sterile and/or
pyrogen-free, laboratory determination of conformance to final specifications
4.) Failed to establish written procedures for production and process controls
5.) Failed to prepare batch production and control records with complete
information
6.) Failed to ensure that each person engaged in the manufacture, processing,
packing, or holding of a drug product has the education, training, and experience,
to enable that person to perform his or her assigned functions
25. • Hurricane Maria wiped out electricity for all of Puerto Rico
• Nearly 50 pharmaceutical plants on the island are idled
• Power isn't likely to be restored to the island for three to six
months
• Pharmaceuticals represented 72% of Puerto Rico's 2016
exports, valued at $14.5 billion
• Eli Lilly suspended "normal manufacturing operations" at its
two Puerto Rico plants
• AstraZeneca’s plant in Canovanas, Puerto Rico halted
production
USA TODAY Sept. 22, 2017
Environmental Risk To The Pharmaceutical Supply Chain
31. • Foreign buyers are increasingly worried about the environmental performance of
their Chinese suppliers, if only out of fear that noncompliant companies will be
shut down by the authorities.
• This concern is prompting even small and medium-sized companies from the
West to pay for environmental audits of their key Chinese suppliers
• Companies must reckon with a recent update to China’s main environmental
law
• The first change in China’s environmental laws in 25 years provides the
basis for an overhaul of the country’s environmental policy.
• Companies that had been content to pay fines rather than comply with
environmental rules will find it too expensive to do so.
• Polluters will be assessed penalties for every day that their emissions are
deemed noncompliant.
J. Public Adm. Res. Theory 2014
Environmental Responsibility & Supply Chain Risk
34. • Officials from environmental protection bureaus throughout
China will no longer be accountable to the local government
where they are based.
• They will report directly to their ministries in the provincial
capitals
• This change is to stop the interference of local officials who
want to protect their cities’ economic engines.
Environmental Responsibility & Supply Chain
Risk
J. Public Adm. Res. Theory 2014
35.
36. • China’s cabinet, the State Council, issued national guidelines for the relocation of
chemical plants, owned by both local and foreign firms, that produce or handle
compounds on a list of hazardous substances.
• Many of these plants were built years ago in outlying areas but have since been
enveloped by urban sprawl.
• The State Council’s new guidelines call for accelerating chemical plant
relocation in China.
• Companies producing or handling dangerous substances, should relocate
into government-approved industry parks no later than 2020.
• Chemical plants handling substances deemed less risky but still
dangerous should complete their moves by the end of 2025.
• Companies that refuse to comply will be ordered to shut down.
Environmental Responsibility & Supply Chain
Risk
37.
38. • Companies that had been content to pay fines rather than comply with
environmental rules will find it too expensive to do so.
• Polluters will be assessed penalties for every day that their emissions
are deemed noncompliant.
J. Public Adm. Res. Theory 2014
Authorities in the coastal province of Jiangsu, have
ordered companies to suspend the shipment of
chemicals considered dangerous in the second half
of October 2017!
Environmental Responsibility & Supply Chain
Risk