Bankruptcy Caused By Fabricated GMP Certificates
Why would there be fabricated GMP and ISO Certificates?
In pharmaceutical and chemical trading, Chemical Suppliers in China are often required to provide Factory GMP (Good Manufacturing Practice) documentation, along with the manufacturer’s original Certificate of Analysis (CoA), for registration or evaluation purposes.
It is not a problem for factories with Chinese GMP, ISO, or those audited by foreign authorities such as the EDQM, US FDA, TGA, or COFEPRIS, etc.
We all know that GMP and ISO certificates are only issued to factories that produce certain products (Though there are ISO certificates for sales).
What should those chemical suppliers without any certificates do?
If the chemical suppliers are honest and submit the original GMP Certificates and the CoA to the customer, and when there is no GMP—I mean, no factory in China has GMP for it—they tell importers the truth.
But imagine that once the importers have the original certificates with manufacturer names on them, what will importers do?
Maybe the importers want to ensure that the relevant APIs they need to import are GMP-certified, suitable for their MOH registration, and allowed for human consumption when made into formulations.
However, some importers skip the traders and contact the pharmaceutical manufacturers immediately after they learn the factory names, thereby obtaining a lower price and avoiding the traders.
At the very least, the importers can expect a discount from the manufacturer, which is the margin currently enjoyed by the traders.
So, some suppliers may say they can only provide Original GMP and CoA after buyers confirm the order.
Will the buyers agree and proceed to confirm the order?
No way!
Without those certificates, most importers will not consider and validate the suppliers’ offer, let alone confirm the order.
So, the original GMP became a headache for many Chinese suppliers.
As a result, suppliers fabricate GMP or ISO certificates to get orders from the importers.
With those fake certificates, the suppliers received orders one after another without customers knowing the genuine manufacturers.
Even worse, some chemical exporters sell APIs from non-GMP manufacturers under the guise of GMP factories, and their buying prices are much lower than the cost of GMP-grade raw materials.
Once those suppliers tasted the fake certificates, they began fabricating them at will.
Many chemical suppliers are already doing it, and more traders are about to follow suit.
But here we say it loudly: it is NOT OK.
On one hand, those importers who skipped the suppliers and contacted the manufacturers directly were unethical.
On the other hand, GMP fabrication is not only a great danger to human health but also a SERIOUS CRIME.
Chemical-grade APIs (even though their purity is over 99% and the single impurities are below 0.1%) are not suitable for medicine manufacturing and pharmacy compounding.
They can only use GMP-approved APIs, which are referred to as pharma-grade APIs.
For APIs suitable for formic acid-based acid manufacturing, there are requirements for purity and control over single impurities, as well asd stability studies, production processes, and adaptability evaluations.
Once law enforcement officials prosecute API importers for purchasing counterfeit pharmaceutical ingredients, they may bankrupt their importers, potentially dragging importers and exporters into prison for the crime: importers for failing to properly verify API sources and exporters for knowingly committing a crime.
To avoid such tragedies, importers must verify the GMP before they import. (For importers who don’t know how, please check our post: How to Verify Chinese GMP Online.)
Main Reasons of Fabricated GMP Certificates
Below are the possible reasons why exporters would fabricate GMP certificates:
1 There are GMP holders, but exporters still fabricate them, as they don’t want to be exploited and left alone by the API importers after the importers find the GMP manufacturer’s name on GMP certificates.
These chemical exporters don’t adequately protect confidential supply-chain information. They can sign a Non-Disclosure Agreement (NDA) with the importers before providing the GMP certificates.
Exporters sell GMP-grade APIs to importers, but they keep the manufacturers’ names secret to maintain the business as long as possible.
Let’s hope there are no legal issues. Still, if there are any lawsuits, the liabilities are all on the exporters, as they don’t provide all the necessary information for the API registrations.
2. There are no GMP holders for a particular pharmaceutical ingredient, but exporters still want to sell this API to a specific country, so they have to fabricate GMP certificates.
Some exporters are profit-driven and forget about the law. They attempt to sell certain non-GMP APIs to foreign countries to generate additional revenue, but importers are often unaware of this practice.
Once lawsuits arise, exporters are often blamed.
3. There are no GMP certificates; exporters and importers conspire to import non-GMP APIs for medicine manufacturing.
Both exporters and importers are aware that GMP-compliant companies do not manufacture certain APIs; yet, they still wish to conduct business and generate revenue, potentially violating the law.
There will undoubtedly be legal consequences sooner or later; exporters and importers should be imprisoned.
We are not being over-dramatic here, and we will share similar stories in future posts.
We also welcome your ideas on how suppliers and customers can establish trust in each other within the international chemical trade.
