There's been no trace of the original gold-digging market for a long time. The hyperbole and initial euphoria have been followed by disillusionment and stark reality. For some time now, the Steiff company with its cozy teddy bear has not been alone in recognizing that quality has its price and that perhaps producing at home would lead to more success after all.

However, the wheels of time keep grinding, and China is learning. That can be felt all too plainly in the pharmaceutical market. If yesterday cheap production was the order of the day, now the temptation is market opportunity in connection with the name "China."

GMP in China

In 2005, Gempex ventured to gain a foothold in China. It was both by chance and a tempting prospect. Joint venture Gemro Services was founded with the aim of offering good manufacturing practice (GMP) services in China.

Although GMP rules existed at that time, there were significant differences compared with Western requirements. GMP mostly focused on cleanroom technology with a cleanroom classification of 300,000. Whoever had built a cleanroom with all the related airlock systems was practically GMP suitable - but only in China.

The interest in GMP in China in those days seemed to be enormous. People wanted to learn more about Western manufacturing requirements and how to meet them. However, at the end of each discussion stood the simple question of how to get an appropriate GMP certificate as quickly as possible and how much it would cost, but no business was generated at the end of the day.

At that point in time, an estimated 5,000 companies wanted to break into the active substance market and earn a premium in the West. They were bolstered by state subsidies allowing cheap construction land and providing initial financial momentum. But on the Chinese side came the sobering realization of being not only distinctly remote from the Western concept of quality, but also having neither products nor customers.

Legal Regulations

The quality hurdle was recognized by the state, and since 2010, GMP standards have been in place that closely match European standards with only minimal differences. The Chinese government initiated an intensive training program for inspectors to qualify existing personnel. Experts predicted - and the current trend confirms - that from the original 5,000 active producers only approximately 500 reliable companies will remain.

However, the inspector training is not aimed at home country producers only. They are being trained to supervise producers hoping to serve the Chinese market from outside China. In the meantime, the program has started, so Western producers now have the dubious pleasure of greeting Chinese inspectors in their own plants.

Whereas yesterday it was Western standards that were deemed too high, it is now, paradoxically, Chinese standards that Western companies are finding themselves increasingly unable to meet. The Chinese rules for the production of excipients specifically stipulate conformance with GMP and include validation, which, in the West, is just an industry standard. For all purification and filling steps that do not take place wholly in a closed environment, active substance producers are now required to implement them in a cleanroom Class D (equal to EU GMP Class D). Also producers of primary packaging material are now confronted with the legal requirement to produce under cleanroom Class D where the air exchange rate is at least 15. Meanwhile, that is not restricted to production in China: EU standards are being raised to match those in China.

A Fast-Growing Market

A country with a population of close to 1.37 billion citizens that, in the last 10 years, has developed rapidly to a near economic and cultural No. 1 in the global market, has suddenly presented new market potential. The population earns significantly more, its prosperity has increased to being able to afford more health-care and personal hygiene products at least and - lo and behold - the Chinese have become aware of products produced in the West or by Western companies. Those who can afford it do not look to the home market for milk or baby nutrition; imported products are in demand.

So the trend is for more and more Western companies to go again to China, now focusing on serving the Chinese market. For that reason, after nine years of - not particularly fruitful - activity in China, Gempex has also decided to extend its presence and has founded a 100% Gempex subsidiary based in Guangzhou. A team of six well-qualified and extensively experienced Chinese GMP experts together with their German colleagues will offer GMP support.