China Tightens Contract Drug Manufacturing Rules

On December 30, 2025, China’s National Medical Products Administration (NMPA) issued Announcement No. 134, which is expected to strengthen the oversight of local contract drug manufacturing. The regulation took effect immediately and provides a one-year rectification period. Companies that fail to comply may face suspension of contract manufacturing activities, reduction of manufacturing scope, or revocation of licenses. One of the main changes is that contract manufacturers are now required to conduct reverse due diligence. In the past, marketing authorization holders (MAH) were responsible for evaluating contract manufacturers prior to entering into a project with them. In short, contract manufacturers imposed very few requirements on MAHs.

Under the new rule, before accepting a manufacturing commission, a contract manufacturer must conduct a complete evaluation of the qualifications of the MAH, the quality management system of the MAH, the risk profile of the product, and the technology transfer feasibility. Contract manufacturers cannot proceed until they confirm that the MAH passes this evaluation. Contract manufacturers are also required to give priority to MAHs that have independent R&D management capabilities and control over key process technologies.

This represents a fundamental shift in regulatory expectations. Rather than passively providing services to MAHs, contract manufacturers are also expected to actively screen their potential MAH partners to mitigate quality risk at the source.

For multinational pharmaceutical companies and Chinese biotech firms, the impact extends beyond manufacturing compliance. In licensing transactions where local production relies on an MAH+CMO structure, companies must now assess whether they can pass a CMO’s reverse evaluation.