MEASURES FOR THE LICENSING FOR PRODUCTION AND OPERATION OF NON-PHARMACEUTICAL PRECURSOR CHEMICALS

the State Administration of Work Safety

Order of the State Administration of Work Safety of the People’s Republic of China

No. 5

The Measures for the Licensing for Production and Operation of Non-pharmaceutical Precursor Chemicals, which were deliberated and
adopted at the director general’s executive meeting of the State Administration of Work Safety on March 21, 2006, are hereby promulgated,
and shall come into force as of April 15, 2006.

Director General Li Yizhong

April 5, 2006

Measures for the Licensing for Production and Operation of Non-pharmaceutical Precursor Chemicals

Chapter I General Provisions

Article 1

For the purpose of strengthening the administration on non-pharmaceutical precursor chemicals, regulating the production and operation
of non-pharmaceutical precursor chemicals, preventing non-pharmaceutical precursor chemicals from being used to manufacture drugs
and maintaining economic and social order, the present Measures are formulated in accordance with the Regulation on the Administration
of Precursor Chemicals (hereinafter referred to as the Regulation) as well as other relevant laws and administrative regulations.

Article 2

The term “non-pharmaceutical precursor chemicals” as mentioned in the present Measures shall refer to the non-pharmaceutical major
materials and chemical auxiliary substances which are prescribed in the Attached Table of the Regulation and may be used to produce
drugs.

As for the classes and varieties of non-pharmaceutical precursor chemicals, please see the Attached Table of the present Measures,
the Catalogue of Classes and Varieties of Non-pharmaceutical Precursor Chemicals.

When the adjustment to the Attached Table of the Regulation, the Catalogue of Classes and Varieties of Precursor Chemicals or to the
Catalogue of Hazardous Chemicals involves the Attached Table of the present Measures, the Catalogue of Classes and Varieties of Non-pharmaceutical
Precursor Chemicals shall be adjusted accordingly and promulgated.

Article 3

The state adopts a license system for the production and operation of non-pharmaceutical precursor chemicals. The production and operation
of non-pharmaceutical precursor chemicals of Class I shall be subject to the license-based administration, while the production and
operation of precursor chemicals of Class II and Class III shall be subject to the archival certificate-based administration.

The administrative departments of work safety of the people’s government of all provinces, autonomous regions, or municipalities directly
under the Central Government shall take charge of the examination and approval of the production and operation of non-pharmaceutical
precursor chemicals of Class I within their respective jurisdictions and the issuance of the licenses thereof.

The administrative departments of work safety of the people’s government in cities divided into districts shall take charge of the
issuance of archival certificates for production and operation of non-pharmaceutical precursor chemicals of Class II or for production
of non-pharmaceutical precursor chemicals of Class III within their respective jurisdictions.

The administrative departments of work safety of the people’s government at the county level shall take charge of the issuance of
archival certificates for operation of non-pharmaceutical precursor chemicals of Class III within their respective jurisdictions.

Article 4

The State Administration of Work Safety shall supervise and guide the licensing for production and operation of non-pharmaceutical
precursor chemicals all over the country and the archival filing administration thereof.

The administrative departments of work safety of the people’s government at the county level or above shall take charge of implementing
the supervision and administration of the system of licensing for production and operation of non-pharmaceutical precursor chemicals
within their respective jurisdictions.

Chapter II Licensing for Production and Operation

Article 5

Whoever intends to produce or operate a non-pharmaceutical precursor chemical of Class I shall not engage in the production or business
activities until having obtained the license for production or operation of the non-pharmaceutical precursor chemicals.

Article 6

Whoever intends to produce or operate a non-pharmaceutical precursor chemical of Class I shall meet the conditions as prescribed in
Article 7 and Article 9 of the Regulation.

Article 7

Where a producer applies for a license for the production of a non-pharmaceutical precursor chemical, it shall submit the following
documents and materials to the administrative department of work safety of the local people’s government at the provincial level,
and shall be responsible for the authenticity thereof:

(1)

A letter of application for the license for production of the non-pharmaceutical precursor chemical (in duplicates);

(2)

Introduction materials of the production equipment, warehousing facilities and pollutant treatment facilities;

(3)

Precursor chemical management rules and plan on responding to environmental emergencies;

(4)

Work safety management rules;

(5)

Materials proving that its legal representative or principal person-in-charge, as well as its technicians and managers have corresponding
knowledge on work safety;

(6)

Materials proving that its legal representative or principal person-in-charge, as well as its technicians and managers have corresponding
knowledge on precursor chemicals and have no records on drug-involved crimes;

(7)

A counterpart of its industrial and commercial business license (photocopy); and

(8)

Directions of the product package and the directions to use chemicals.

Where a producer belongs to hazardous chemical-producing entities, it shall, in addition, submit its work safety license of hazardous
chemical production enterprise, and the hazardous chemical registration certificate (photocopies), without having to submit the documents
and materials as required by Items (4), (5) and (7) of the present article.

Article 8

When applying for a license for operation of a non-pharmaceutical precursor chemical, a business entity shall submit the following
documents and materials to the administrative department of work safety of the local people’s government at the provincial level,
and shall be responsible for the authenticity thereof:

(1)

A letter of application for the license for operation of the non-pharmaceutical precursor chemical (in duplicates);

(2)

Introduction materials of the production site and the warehousing facilities;

(3)

Precursor chemical management rules and the sales network documents containing the contents such as sales institutions, sales agencies
and users, etc.;

(4)

Materials proving that its legal representative or principal person-in-charge and its sales staff and managers have corresponding
knowledge on precursor chemicals and have no records on drug-involved crimes;

(5)

A counterpart of its industrial and commercial business license (the photocopy); and

(6)

Directions of the product package and the directions to use chemicals.

Where a producer belongs to hazardous chemical-producing enterprises, it shall, in addition, submit its license for operation of hazardous
chemicals (photocopy), without having to submit the documents and materials as required by Item (5) of the present article.

Article 9

The administrative departments of work safety of the people’s governments of all provinces, autonomous regions, or municipalities
directly under the Central Government shall handle the letters of application as well as the documents and materials submitted by
applicants respectively according to the following:

(1)

Where the issues in the application do not fall within its purview, it shall immediately issue a written document on refusing to accept
the application;

(2)

Where the application materials contain any error that may be corrected on the spot, it shall permit or require the applicant to correct
the aforesaid error on the spot;

(3)

Where the application materials are incomplete or fail to meet the requirements, it shall inform the applicant in written form once
for all of the contents to be supplemented either on the spot or within 5 working days. And it shall be deemed to have accepted the
application as of receipt of the application materials, if it fails to inform the applicant within the time limit; or

(4)

Where the application materials are complete, meet the requirements or are supplemented and corrected completely as required, it shall
be deemed to have accepted the application as of receipt of the application materials or as of full supplement and correction of
the materials.

Article 10

The administrative departments of work safety of the people’s governments of all provinces, autonomous regions, or municipalities
directly under the Central Government shall examine the accepted application materials, and may make on-site checks when necessary.

Article 11

As of the date of acceptance, the administrative departments of work safety of the people’s governments of all provinces, autonomous
regions, or municipalities directly under the Central Government shall make a decision on issuing or refusing to issue the license
within 60 working days in case of an application for the license for production of a non-pharmaceutical precursor chemical, or within
30 working days in case of an application for the license for operation of such a chemical.

Where an issuance is granted, it shall deliver the license to the applicant or notify the applicant to fetch the license within 10
working days as of making the decision; where an issuance is not granted, it shall notify the applicant in written form and explain
the reasons thereof within 10 working days.

Article 12

The valid term of a license for production or operation of a non-pharmaceutical precursor chemical shall be 3 years. Where the producer
or operator needs to continue producing or operating a non-pharmaceutical precursor chemical of Class I after the expiry of the valid
term of the license, it shall file an application for replacement of the license to the original administrative department that has
issued its license, and submit the corresponding materials within 3 months prior to the expiry of the valid term of the license,
and obtain a new license after examination to be qualified.

Article 13

Where a producer or operator of a non-pharmaceutical precursor chemical of Class I is under any of the following circumstances within
the valid term of its license for production or operation of the non-pharmaceutical precursor chemical, it shall apply for modification
of its license to the original administrative department that has issued its license:

(1)

Its legal representative or principal person-in-charge is changed;

(2)

Its name is changed;

(3)

The main flow of the licensed varieties is changed; or

(4)

Any variety needs to be added or the quantity needs to be increased.

As for the modification under Item (1) or (3) of the present article, the application shall be filed within 20 working days as of
the time of alteration; while for the modification under Item (2) of the present article, the application shall be filed after the
industrial and commercial business license is modified.

The producer or operator concerned shall provide the relevant materials which proves that the modified legal representative or principal
person-in-charge meets the requirements in Item (5) or (6) of Article 7 or Item (4) of Article 8 of the present Measures to apply
for the modification under Item (1) of the present article. The producer or operator concerned shall provide a counterpart of the
modified industrial and commercial business license (photocopy) to apply for the modification under Item (2) of the present article.
The producer or operator concerned shall separately provide the statement on the change of the main flow or the relevant information
required by Item (3) of Article 8 to apply for the modification under Item (3) of the present article. The producer or operator
concerned shall provide the relevant information required by Items (2), (3) and (8) of Article 7 or Items (2), (3) and (6) of Article
8 of the present Measures to apply for the modification under Item (4) of the present article.

Article 14

With respect to an accepted application for modification under Item (1), (2) or (3) of Article 13 of the present Measures, the administrative
department for the issuance of licenses may go through the procedures for modification of the license for production or operation
of the non-pharmaceutical precursor chemical concerned after checking the documents and materials submitted by the applicant.

With respect to an accepted application for modification under Item (4) of Article 13 of the present Measures, the administrative
department for issuance of licenses shall go through the procedures for modification of the license for production or operation of
the non-pharmaceutical precursor chemical in accordance with Article 10 and Article 11 of the present Measures.

Article 15

Where any of the original technicians, sales staff or managers of the producer or operator of a non-pharmaceutical precursor chemical
is changed, the newly appointed person shall have corresponding knowledge on work safety and precursor chemicals.

Article 16

Where the producer or operator of a non-pharmaceutical precursor chemical of Class I no longer produces or operates the non-pharmaceutical
precursor chemical, it shall go through the procedures for nullification of the license within 3 months after stopping the production
or operation.

Chapter III Archival Filing of Production and Operation

Article 17

Whoever produces or operates a non-pharmaceutical precursor chemical of Class II or Class III shall go through the archival filing
of production or operation of the non-pharmaceutical precursor chemical.

Article 18

Whoever produces a non-pharmaceutical precursor chemical of Class II or Class III shall report the varieties under production, the
quantity and etc. to the administrative department of work safety of the local people’s government at the districted city level for
archival filing within 30 working days as of the day of production.

Whoever operates a non-pharmaceutical precursor chemical of Class II shall report the varieties under operation, the quantity, the
main flow and etc. to the administrative department of work safety of the local people’s government at the districted city level
for archival filing within 30 working days as of starting operation.

Whoever operates a non-pharmaceutical precursor chemical of Class III shall report the varieties under operation, the quantity, the
main flow and etc. to the administrative department of work safety of the local people’s government at the county level for archival
filing within 30 working days as of starting operation.

Article 19

The producer of a non-pharmaceutical precursor chemical of Class II or Class III shall submit the following materials for archival
filing:

(1)

A letter of application for archival filing of the varieties, quantity, sales volume and etc. of the non-pharmaceutical precursor
chemical;

(2)

Precursor chemical management rules;

(3)

Directions of the product package and the directions to use chemicals; and

(4)

A counterpart of its industrial and commercial business license (photocopy).

Where a producer belongs to hazardous chemical-producing enterprises, it shall, in addition, submit its work safety license of hazardous
chemical production enterprise and its hazardous chemical registration certificate (photocopies), without having to submit the documents
and materials required by Item (4) of the present article.

Article 20

The operator of a non-pharmaceutical precursor chemical of Class II or Class III shall submit the following materials for archival
filing:

(1)

A letter of application for archival filing of the varieties for sale, sales volume, main flow and etc. of the non-pharmaceutical
precursor chemical;

(2)

Precursor chemical management rules;

(3)

Directions of the product package and the directions to use chemicals; and

(4)

A counterpart of its industrial and commercial business license (photocopy).

Where a producer belongs to hazardous chemical-producing enterprises, it shall, in addition, submit its license for operation of hazardous
chemicals, without having to submit the documents and materials required by Item (4) of the present article.

Article 21

The competent department for archival filing of production and operation of a non-pharmaceutical precursor chemical of Class II or
Class III shall issue the archival certificate on the same day of the receipt of the materials as prescribed in Article 19 or Article
20 of the present Measures for archival filing.

Article 22

The valid term of a certificate on archival filing of production and operation of a non-pharmaceutical precursor chemical of Class
II or Class III shall be three years. Where the producer or operator needs to continue the production or operation after the expiry
of the valid term, it shall go through the archival filing procedures once again within 3 months prior to the expiry of the valid
term of the archival certificate.

Article 23

Where the legal representative or principal person-in-charge, the name or the address of the producer or operator of a non-pharmaceutical
precursor chemical of Class II or Class III is changed, the producer or operator shall go through the archival filing procedures
once again within 30 working days as of modification of the industrial and commercial business license; while where any archived
variety for production or operation is added or the main flow is changed, the producer or operator shall go through the archival
filing procedures once again within 30 working days as of such change or addition.

Article 24

Where the producer or operator of a non-pharmaceutical precursor chemical of Class II or Class III no longer produces or operates
the non-pharmaceutical precursor chemical, it shall go through the procedures for nullification of the archival filing within 3 months
as of terminating the production or operation.

Chapter IV Supervision and Administration

Article 25

The administrative departments of work safety of the people’s government at the county level or above shall strengthen the supervision
and inspection over the production and operation of non-pharmaceutical precursor chemicals.

The administrative departments of work safety of a people’s government at the county level or above may check the scene, consult and
photocopy the relevant materials, record the relevant information, detain the relevant evidential materials and illegal articles
when supervising or inspecting the activities of producing or operating non-pharmaceutical precursor chemicals; and they may temporarily
seal up the relevant sites when necessary.

The entities or individuals under inspection shall truthfully provide the relevant information and articles, and shall not refuse
to provide or conceal them.

Article 26

A producer or operator shall report the information such as the varieties, quantity, main flow and etc. of the non-pharmaceutical
precursor chemical it produced or operated the last year to the administrative department of work safety that has granted the license
or handled the archival filing by March 31 of each year.

The administrative departments of work safety shall report the gathered information on the non-pharmaceutical precursor chemicals
produced and operated last year within their respective jurisdictions to the administrative departments of work safety at the higher
level within 10 working days as of receipt of a report.

Article 27

The administrative departments of work safety at each level shall set up archives on license and archival filing of non-pharmaceutical
precursor chemicals, and shall strengthen information management.

Article 28

An administrative department of work safety shall timely report the information on the licensing for production and operation of non-pharmaceutical
precursor chemicals as well as on the revocation of licenses and etc. to the public security organ or administrative department for
industry and commerce at the same level, and report the relevant information on issuance of licenses and archival certificates to
the administrative department of commerce.

Chapter V Penalty Provisions

Article 29

In case of any of the following acts, the administrative departments of work safety of the people’s government at the county level
or above may stop accepting the producer’s or operator’s application for licensing for production or operation of or for archival
filing of its non-pharmaceutical precursor chemical for 3 years as of the time when the department prescribed in Article 38 of the
Regulation makes the administrative penalty decision:

(1)

Unlawfully producing or operating non-pharmaceutical precursor chemicals without being licensed or archived;

(2)

Forging application materials to obtain the license for production or operation of or the certificate for archival filing of a non-pharmaceutical
precursor chemical by fraud;

(3)

Using others’ license for production or operation of or certificate for archival filing of a non-pharmaceutical precursor chemical;
or

(4)

Using a forged, altered or invalidated license for production or operation of or certificate for archival filing of a non-pharmaceutical
precursor chemical.

Article 30

In case of any of the following acts, the administrative departments of work safety of the people’s government at the county level
or above shall make a warning to the producer or operator, order it to make corrections within a time limit, and impose on it/him
a fine of 10,000 Yuan up to 50,000 Yuan; and the non-pharmaceutical precursor chemical which is produced or operated in violation
of provisions may be confiscated. Where the producer or operator fails to make corrections within the time limit, it shall be ordered
to stop production or operation within a time limit for rectification. Where it remains to be unqualified after the rectification
within the time limit, its corresponding license shall be revoked:

(1)

The producer or operator of a precursor chemical fails to accord with the provisions to establish precursor chemical management rules
or safety management rules;

(2)

It lends the license or archival certificate to others for use;

(3)

It produces or operates a non-pharmaceutical precursor chemical that exceeds the licensed varieties and quantity;

(4)

The directions of the package of the precursor chemicals and the directions to use such chemicals fail to meet the requirements as
prescribed in the Regulation; or

(5)

The producer or operator of a non-pharmaceutical precursor chemical fails to truthfully or timely report the information on annual
production or operation, etc. to the administrative department of work safety.

Article 31

Where an entity or individual who produces or operates a non-pharmaceutical precursor chemical refuses to accept the supervision and
inspection by the administrative departments of work safety, the administrative departments of work safety of the people’s government
at the county level or above shall order it to make corrections, and make a warning to the directly responsible person-in-charge
and other persons directly liable. Where the case is serious, the entity shall be imposed upon a fine of 10,000 Yuan up to 50,000
Yuan, while the directly responsible person-in-charge and the persons directly liable shall be imposed upon a fine of 1,000 Yuan
up to 5,000 Yuan.

Article 32

Where any of the working staff of an administrative department of work safety abuses his powers, neglects his duties, practices favoritism
for himself or his relatives or divulges an enterprise’s commercial secret during the administrative work, he shall be imposed upon
administrative sanctions according to law; where any crime is constituted, he shall be subject to criminal liabilities according
to law.

Chapter VI Supplementary Provisions

Article 33

The licenses for production or operation of non-pharmaceutical precursor chemicals and the certificates for archival filing thereof
shall be produced under the supervision of the State Administration of Work Safety.

The pattern and format of the annual report on non-pharmaceutical precursor chemicals and that of the letter of application for licensing,
archival filing or modification shall be prescribed by the State Administration of Work Safety.

Article 34

The present Measures shall come into force as of April 15, 2006. Attached Table:Catalogue of Classes and Varieties of Non-pharmaceutical Precursor Chemicals

Class I

1.

1-Phenyl-2-Propanone

2.

3, 4-Methylenedioxyphenyl-2-Propanone

3.

Piperonal

4.

Safrole

5.

Sassafras oil

6.

Isosafrole

7.

N-acetylanthranilic acid

8.

Anthranilic acid

Class II

1.

Penylacetic acid

2.

Acetic anhydride￿￿> 3.

Trichloromethane￿￿> 4.

Aether￿￿> 5.

Piperidine￿￿>

Class III

1.

Toluene￿￿> 2.

Acetone￿￿> 3.

Methyl ethyl ketone￿￿> 4.

Potassium permanganate￿￿> 5.

Sulfuric acid

6.

Hydrochloric acid￿￿>Notes:

1.

The salts that might contain the substances of Class I and Class II shall also be under control.

2.

The varieties marked with ‘￿￿are hazardous chemicals.