Germany’s pharmaceutical market heavily relies on China, with 22% of active ingredients originating from the country. This dependence poses a significant challenge due to the long supply chain, making it vulnerable to disruptions. The halt of production in Chinese factories can quickly lead to bottlenecks in the European market. Currently, European pharmaceutical companies are facing not just technical issues but actual political problems.
The new “Anti-Spy Law” enacted by the Chinese Communist Party in July 2023, along with the “National Security Law” in May of this year, has significantly tightened laws against espionage activities. Not only can these laws prevent suspected spies from leaving China, but they also extend to what is known as “trade secrets.” This vague term encompasses information that may not be classified as state secrets but could potentially have adverse effects on China if leaked.
These regulations have a practical impact on the German pharmaceutical industry as German inspectors fear being treated as spies in China. To monitor safety and quality standards, German inspection personnel must regularly travel to China. According to the German Drug Law, authorities are obligated to conduct regular inspections of manufacturing sites. Upon completion of inspections, a GMP certificate, which stands for “Good Manufacturing Practices,” is issued, confirming compliance with quality assurance regulations and standards. This certificate is a prerequisite for German companies to import active ingredients from China. Companies also have the responsibility to inspect their suppliers’ production facilities to ensure compliance with legal and contractual requirements.
All these practices have been standard so far. However, inspection activities are now at a standstill. The reason is evident: whether government or company inspectors, they must sift through mountains of documents and data, make copies, and bring them back to Germany when necessary. There is concern that Chinese authorities may classify the information obtained in this manner as “trade secrets” under the new laws. Transitioning from inspectors to spies could be a mere step under the rule of the Chinese Communist Party.
In Germany, regional committees are typically responsible for official inspections. The German Pharmaceutical Industry Association reports that many federal states have ceased certification audits. Fatima Bicane, an GMP certification expert at the German Pharmaceutical Association, stated, “We have been informed by our members across Germany that their inspectors responsible for them have temporarily suspended certification in China until further notice.”
This delay is setting a time bomb for Germany’s supply security. Bicane described the situation as “particularly worrying” since testing activities have stalled during the pandemic. However, as certificates must be renewed periodically, a very challenging situation is expected to arise by the end of this year at the latest. Bicane suggested, “Inspection activities in China should actually be strengthened. Inspectors should be in China every day to make up for the backlog of inspections and prevent potential bottlenecks.”
The association has sought assistance from the German government. Managing Director Dorothee Brakmann stated, “So far, the path to resolving the issue has been challenging.” She believes that the first step should be “led by federal ministries in cooperation with federal states.” The Chinese side must understand that “certification serves both parties’ economic interests and is unrelated to espionage activities.”