Why Consignors Need to Revisit CMO GMP Risk Now
An amendment to Korea's Rules on the Safety of Pharmaceuticals in December 2022 allowed regulators to revoke GMP compliance certification when a manufacturer produces products differently from their approval and falsifies batch records. The industry calls it the "GMP one-strike-out" rule: a single violation can put certification for an entire dosage form or site at risk.
The Donggu Bio Pharmaceutical case shows what that means in practice. In August 2024, the company's oral solid dosage facility had its GMP certification revoked. A stay of execution let production continue. After a first-instance ruling in the revocation lawsuit in 2026, appellate proceedings reportedly began in August. The case has not been finally decided.
According to press reports, the two products involved in the violation accounted for roughly KRW 2.2 billion in outpatient prescriptions, while the company estimated the impact of a suspension at about KRW 143 billion. For choline alfoscerate soft capsules alone, 57 companies reportedly contract out manufacturing to the site. Consignors with no connection to the violation can still lose supply. In October 2026 the industry reopened the proportionality debate ("what did the consignors do wrong?"). Whether or not the rules change, consignors carry the same risk under the current framework.
How a CMO's Sanction Spreads to Consignors
Dosage-form or site-level revocation: Every consigned product made in that facility can no longer be shipped.Recall and sales-suspension liability: Recalls are carried out in the name of the marketing authorization holder, which is the consignor. Supply contracts with hospitals and wholesalers then face breach risk.CMO financial distress: Some repeatedly sanctioned CMOs have entered court-led rehabilitation, which can leave long supply gaps.Shortage reporting duty: The amended Pharmaceutical Affairs Act takes effect on November 12 and requires companies to report supply interruptions of essential medicines at risk of shortage. Consignors should decide in advance whether their consigned products fall within scope.Audit Checklist for Selecting and Retaining a CMO
Sanction and recall history: Review the past 3–5 years of administrative actions and recalls in MFDS public databases. Ask the CMO for its GMP inspection results and the corrective actions it took on any findings.Source-record verification: Check batch records and certificates of analysis against the originals. Sample lots to confirm that excipient and process change histories match the approved specifications.Data integrity (ALCOA+): Confirm that audit trails are enabled for electronic records, user accounts are separated by role, and retests and deletions are logged.External auditors: A small consignor without in-house QA staff can realistically meet this need by hiring an experienced GMP auditor for periodic audits.Clauses Every Quality Agreement Should Include
Prior written approval for any change to approved specifications or excipient substitution, and deadlines for reporting deviations and OOS results (e.g., within a set number of business days of discovery)The consignor's on-site audit rights and an obligation to share MFDS inspection outcomesCooperation on alternative manufacturing, handover of technology transfer documents, and rules for damages and inventory if a sanction or supply halt occursSeparate roles for the two documents: price, volume and delivery belong in the supply agreement; the division of quality responsibilities belongs in the quality agreement.Dual Sourcing and Business Continuity Planning
Prioritize: Secure a second site first for your top-revenue products and essential medicines.Procedures and timelines: Adding or changing a manufacturing site may require a variation approval and bioequivalence data. Lead times differ by product and dosage form, so confirm them early.Safety stock: Set safety stock based on how long a switch to an alternative site would take. Document a supply-interruption scenario that spells out who notifies whom, about what, and when.How KITIM Can Help
KITIM conducts CMO GMP audits on your behalf, reviews quality agreements, and assesses the risk across your consigned-product portfolio. We also build dual-sourcing roadmaps and link them to relevant government programs, such as pharmaceutical smart factory and GMP capability support (subject to each year's calls), to reduce costs.
If you want to check your exposure before a single CMO sanction turns into a revenue gap, contact the KITIM consulting team. We will review your consigned-product lineup and tell you which items to check first.
