China’s pharmaceutical/biotech market offers enormous sourcing and manufacturing opportunities for foreign companies. However, one major challenge remains – product quality is a major concern for foreign firms seeking to procure pharmaceutical products from Chinese factories. Good quality systems that meet China’s National Medical Products Administration (NMPA) standards, as well as the U.S. FDA and other global regulatory standards, are essential.
Apart from domestic regulation, foreign agencies like the U.S. FDA also audit Chinese facilities, and nonconforming companies can be put on import alert lists. Oftentimes, severe problems will curtail much of their production. Destruction or falsification of factory records is a common infraction. Therefore, quality audits, which are normally conducted by qualified independent consultants or the company’s own quality teams, are critical in ensuring compliance before allowing a product into the global supply chain.
The Purpose and Scope of Drug Quality Audits in China
China’s drug quality inspections have multiple purposes. They evaluate the compliance of a Chinese manufacturer to meet international GMP requirements, check compliance with contractual specifications, and confirm the strength of quality control systems.
Audit scopes also differ based on the stage of the product, from starting materials to intermediates and finished products, and usually cover manufacturing and oftentimes laboratory operations too. They may also extend to related services such as utilities (purified water and HVAC systems), warehousing, environmental monitoring, computerized systems, documentation practices, and quality control labs.
Audits may be routine (done on a regular basis), for cause (in case of quality concerns), follow-up (to verify corrective actions), or due diligence to evaluate a new supplier before starting a partnership.
Structure of a Typical Chinese Drug Quality Audit Report
An audit report for a Chinese drug manufacturer typically follows a structured and detailed format. The report should include the following key elements:
- Basic Information
Audits normally start with a basic overview of the facility in an introductory meeting, including things like the audited company’s name and address, type of supplier (e.g., Contract Development and Manufacturing Organization), products they make and intended use, relevant GMP and regulatory guidelines (e.g., ICH Q7/Q8, EU GMP, 21 CFR 210/211), past audit dates, members of the audit team, and representatives from the audited company. - Audit Purpose and Scope
This section summarizes briefly the reason for the audit and what needs to be audited. It connects the audit to a particular client product or project, making it clear if it was a comprehensive GMP inspection, a specific product review, or a follow-up audit. - Company Background
This section includes a summary of the background of the facility’s operation, past regulatory inspections, and past records of compliance. It may also include a summary of products produced, facility layout, and activities on-site. - Audit Summary
An audit summary normally contains a write-up of overall compliance, identifying whether the GMP requirements were met, and summarizing major strengths or major weaknesses. It also provides a breakdown of observations by level of severity, labeled as Critical, Major, Minor, or Recommendation.
- Site Tour Observations
This is the most important section of the report as it covers the auditors’ inspection of critical facility areas:
- Warehouses: this covers topics like materials received receipts, segregation of storage (quarantine, qualified, unqualified), pest control practice, environmental monitoring, and equipment qualificationS.
- Production Areas: this covers topics like equipment qualification/validation, cleaning procedures to avoid cross-contamination, and workflow controls.
- Utilities: this covers topics like water systems (design, monitoring, and sanitation), operation and validation of the HVAC system,ETC.
- Quality Control Laboratories: Sample handling and storage, management of reference standards, analytical instrument qualificationS, and digitalized data integrity.
- Documentation Review
Auditors normally review SOPs, quality manuals, records, and management systems to check for compliance, etc. Documents are checked to ensure they are complete, properly controlled for revisions, meet regulatory standards, are up-to-date (not expired) and contain data integrity provisions. - Observations List
Findings are recorded with detailed descriptions, severity classification, and remedial measure timelines. Examples of low-level findings include things like no pest control risk assessment, inconsistent records of water sampling frequency, incomplete procedural information for packaging reference material, etc. - GMP Compliance Statement
A final statement confirms whether products are manufactured following current GMP and ISO standards and identifies areas that need improvement. - Follow-Up Requirements
The report requires that the audited company establish a Corrective and Preventive Action (CAPA) plan, which should specify accountable personnel, timeframes, and proof of closure of problematic issues and the date when the CAPA plan will be implemented. - Confidentiality and Attachments
Reports contain a confidentiality statement to protect sensitive business information. Attachments can include site maps, photographs, SOP excerpts, and supporting documents.
Case Study
An audit conducted by PBM auditors in July 2023 at a Chinese drug manufacturer shows HOW these elements come together in practice. The audit, required as part of a drug company’s supplier management program, lasted for two days. It covered manufacturing, laboratory services, and facility utilities for specific development-stage drug substances.
The auditors inspected several warehouse buildings, production workshops, purified water and HVAC systems, and analytical laboratories. They assessed SOPs and operational records, equipment qualification reports, and data management practices for laboratory instruments. Key findings include:
- Documentation deficiencies: The quality manual lacked coding principles and procedural details for revisions and distribution.
- Material Management Issues: A rejected raw material label had not been communicated to the manufacturer.
- Pest Control Limitations: The risk assessment lacked information about pest species and preventive measures.
- Utility System Inconsistencies: Inconsistencies in information regarding the frequency of water sampling
- Computerized System Controls: There were no formal systems for software classification and verification principles in accordance with GAMP5.
- Laboratory Procedures: There were no documented packaging requirements for separating stable reference materials.
The audit revealed no critical or major deficiencies and concluded that the Chinese drug manufacturer’s processes could be implemented in accordance with the current GMP requirements. A few minor findings were issued, all of which required a CAPA plan for resolution.
Why These Audits Are Important
For foreign companies sourcing APIs or finished drug products from China, quality management audits are necessary. They ensure that the product meets both the local NMPA standards and the regulatory requirements of the destination market. Without these audits, companies face significant risks of supply chain disruption, product recalls, and regulatory penalties.
Written by: Ames Gross – President and Founder, Pacific Bridge Medical (PBM)
Mr. Gross founded PBM in 1988 and has helped hundreds of medical companies with regulatory and business development issues in Asia. He is recognized nationally and internationally as a leader in the Asian medical markets. Mr. Gross has a BA degree, Phi Beta Kappa, from the University of Pennsylvania and an MBA from Columbia University.