Beijing, Aug 14, 2026 — China’s National Medical Products Administration (NMPA) endorsed centralized manufacturing models for hospital traditional Chinese medicine (TCM) preparations in an official reply to a National People’s Congress proposal, outlining a regulatory framework that shifts traditional formulas toward regional production hubs while tightening quality controls and streamlining filing requirements.
Policy Snapshot
| Attribute | Detail |
|---|---|
| Document | Reply to Proposal No. 3936, 14th NPC 4th Session |
| Proposer | Deputy Fan Zhen |
| Issuers | NMPA; National Administration of Traditional Chinese Medicine |
| Key regulation | Revised Drug Administration Law Implementing Regulations (effective May 15, 2026) |
| Core focus | Hospital preparations; centralized production; regional formulation centers |
Regulatory Streamlining
The NMPA highlighted that the revised Drug Administration Law Implementing Regulations, effective May 15, 2026, codify simplified pathways for hospital TCM preparations. Institutions using traditional preparation methods need only file with provincial regulators rather than seek full approval. Formulations with a five-year or longer clinical use history within the same hospital are exempt from pharmacodynamics and single- and repeat-dose toxicity studies.
The agency also clarified that outsourcing preparation no longer requires a separate regulatory license; hospitals need only file with provincial authorities as the delegating party. The rules mandate that hospital legal representatives and primary executives bear full responsibility for formulation quality, and require provincial regulators to decide on inter-hospital transfer applications within five working days.
The NMPA pointed to its 2023 measures on TCM scientific supervision, which encourage hospitals to use big data, artificial intelligence, and real-world evidence to study clinical positioning, target populations, and dosage regimens for institutional preparations. The framework explicitly supports converting proven hospital formulations with distinct advantages and low adverse-event profiles into new drug candidates.
Quality Safeguards
Regulators pledged intensified inspections of preparation and use processes, with particular scrutiny on outsourced manufacturing by small TCM clinics. The NMPA urged hospitals to establish pharmacovigilance systems for adverse reaction monitoring and endorsed multi-center clinical studies through inter-hospital transfers. The framework requires full traceability of raw materials, production controls, and quality testing.
Centralized Production Push
In the most significant policy signal, the NMPA and NATCM endorsed piloting regional formulation centers to enable shared production, unified quality control, and consolidated distribution of hospital TCM preparations. The agencies said they would draw on national drug traceability system experience to explore full-process digital tracking for institutional formulations, and will summarize local pilot experiences to refine centralized manufacturing and transfer policies.
Market Impact Analysis
The endorsement of regional formulation centers marks a structural shift for China’s hospital TCM sector, which has historically relied on fragmented in-house preparation labs. Centralized production could reduce per-unit manufacturing costs and standardize quality across institutions, but may force smaller hospitals to abandon independent formulation capabilities and rely on regional hubs.
The exemption of five-year traditional formulas from toxicity studies lowers the barrier for heritage formulations to achieve regulatory status, potentially accelerating the pipeline of hospital-developed drugs toward new drug conversion—a pathway the NMPA explicitly supports. For pharmaceutical contract manufacturers, the regional hub model creates new partnership opportunities with hospital networks, particularly in provinces with dense TCM institution clusters.
Forward-Looking Statement
Industry analysts expect the NMPA to release detailed regional formulation center guidelines within 12 to 18 months, following pilot program evaluations. The convergence of simplified filing rules, digital traceability mandates, and centralized production incentives suggests Beijing is positioning hospital TCM preparations as a controlled but strategically important bridge between traditional practice and modern pharmaceutical manufacturing. Companies with expertise in TCM formulation technology and pharmaceutical logistics are likely to benefit as provincial governments begin tendering regional hub contracts in late 2026 and 2027.-China Health Reform Pulse
For detailed implementation guidelines and the full list of approved products, refer to the official announcements from the Guangdong Provincial Medical Device Exchange Center.
Policy Source: https://www.nmpa.gov.cn/zwgk/jyta/rdjy/20260825155646136.html