The logic behind the second rise of Chinese pharmaceutical industry
In just a decade, Chinese pharmaceutical companies have stepped from the backstage to the forefront on the global pharmaceutical industry stage.
Backstage: Around 2015, China mainly produced active pharmaceutical ingredients (APIs) and generic drugs.
This stage can be regarded as the "first rise" of China's pharmaceutical industry - by producing APIs and generic drugs, we became an important "invisible participant" in the global pharmaceutical industry.
Forefront: Today, China's innovative drug industry is rising at an accelerated pace. A large number of Chinese pharmaceutical companies are shedding their status of "working for the United States"👇
● In 2024, 48 innovative drugs were approved for marketing in China, and the number of new drugs under research has jumped to the second place globally.
● In the first half of 2025, the National Medical Products Administration approved more than 40 innovative drugs for marketing, a number close to the total approved last year (48).
● In 2024, new drug clinical trials initiated in China accounted for 30% of the global total.
The Economist magazine published an article this year stating that China has become the second-largest innovative drug research and development country after the United States.
Before delving into the logic of China's pharmaceutical "second rise (innovative drugs)", Xingchuanzhizao wants to share two related observations we've made.
Two "Counterintuitive" Situations
The first thing: A decade ago, there was a short-lived viral article called "Buying a Toilet Lid in Japan".
The general idea of the article was that Chinese people were particularly fond of buying small household appliances in Japan. Why? Because Japanese rice cookers could make rice more "crystal-clear and non-sticky"; Japanese hair dryers could make hair "dry, smooth and silky"; and Japanese toilet lids could make "butts clean and refreshed".
The reason for the article's short lifespan was that its views were outdated.
Firstly, many Japanese toilet lids were actually made in China at that time.
A consumer from Hangzhou went through great trouble to bring back a Panasonic toilet lid, only to find that its sole production base was in Hangzhou.
source: Panasonic
Secondly, similar products were already on sale in the domestic market.
Dong Mingzhu said that it was a joke for Chinese tourists to buy toilet lids and rice cookers abroad, as China was capable of producing high-quality products. Xie Weifan, the chairman of Hengjie Bathroom, said that the author of the article might not be well - informed about the Chinese industry - China's intelligent toilet lid technology was already better than Japan's (China uses instant - heating technology, superior to Japan's water - storage technology).
However, precisely because of its outdated views, this article actually reflected a phenomenon:
The rise of Made in China was much faster than that of Europe and the United States back then - this created a time lag between the actual rise and the public perception and consumer confidence in some industries (especially those in which Europe, the United States, and Japan once had a significant lead).
This perception time lag exists not only among ordinary consumers but also in media reports at times.
Today, before people have generally realized it, in fact, China's pharmaceutical industry has evolved from an important player in the global API and generic drug sectors to an important participant in innovative drugs.
Innovative drugs: They can be simply understood as drugs independently and originally developed from scratch. They require a large amount of time and capital and are protected by patents. During the patent period, they enjoy market exclusivity and are relatively expensive.
Generic drugs: They can be simply understood as "affordable alternatives" to expensive drugs - after the patent of an innovative drug expires, drugs that replicate its ingredients and efficacy. Most of the drugs we buy at pharmacies and those prescribed by hospitals are generic drugs. They are the basic drugs for ordinary people throughout their lives.
Active pharmaceutical ingredients (APIs): They are the active components in drugs and need to be processed into preparations before use.
In addition, there are also "patented drugs" and "original research drugs".
Patented drugs, as the name suggests, are drugs protected by patents. They highly overlap with innovative drugs: all innovative drugs are patented drugs in the early stage of their market entry (still within the patent protection period), but not all patented drugs can be regarded as "innovative drugs" in the strict sense.
Original research drugs are produced by the R & D manufacturers but are not protected by patents. Then generic drugs can be understood as drugs produced by other pharmaceutical companies after the expiration of the drug patent protection - they have the same ingredients and efficacy as the original research drugs but are cheaper.
In short, if we use an analogy, APIs and generic drugs are more like "Made in China", while innovative drugs are "Created in China", the real gem on the crown of the pharmaceutical industry.
The horn for China's pharmaceutical "second rise" represented by innovative drugs has long been sounded, but there is still a lag in confidence and perception in people's minds.
source: pexels
The second thing we want to share is that China's biopharmaceutical industry has become a key pillar of the global supply chain and is deeply embedded in the global medical and health industry network.
For example, most of the drugs sold in US pharmacies are not labeled as being related to "China", but in fact, many drug ingredients ( APIs) in US drugs are supplied by China.
According to relevant data from trade map, most of the acetaminophen and ibuprofen imported by the United States come from China. They are important ingredients in Tylenol and Advil respectively.
source: unsplash
As a global pharmaceutical R & D powerhouse, the United States has long relied on Indian pharmaceutical factories for its generic drugs.
China is the largest supplier of APIs to India.
Once there are problems with "Made in India", the United States will experience drug shortages simultaneously.
Xingchuanzhizao wrote in an old article: "US Shortage, India's Pitfall, China's Rescue"👇
"As soon as the cisplatin injection from China entered the United States, it was snapped up before the Chinese labels could be removed."
The US drug shortage reached a record high in 2023. In the first quarter of 2024, the number of drug shortages in the United States reached a new high.
When Xingchuanzhizao wrote this article, it checked the latest list of scarce drugs on the official website of the FDA (US Food and Drug Administration) (as of 2nd August 2023, Beijing time), and found that 12 anti - tumor related drugs had stopped production and 14 anti - tumor drugs were in short supply, causing great distress to US patients and their families👇
Among the 14 anti - tumor drugs in short supply, 12 were generic drugs👇
In 2023, when there was a drug shortage, medical experts from the University of Chicago wrote in a signed article "A proposal for the Cancer Moonshot: Set up a strategic reserve for lifesaving generic cancer drugs":
"Our problem today is... despite having the world's most technologically advanced medical system, there is an increasing shortage of relevant drugs at present."
The article suggested adding generic drugs including cisplatin, carboplatin, cytarabine, cyclophosphamide, methotrexate etc. to the "generic drug strategic reserve" plan.
source: pexels
The situation of drug shortage in the United States did not improve significantly afterwards. As of the first quarter of 2025, the number of generic drug varieties in short supply in the United States remained at around 270.
On the one hand, due to reasons such as low profits of generic drugs, major US brands started "outsourcing" since the last century, and a large number of local pharmaceutical factories were closed👇
In 2004, the last US factory producing key ingredients for penicillin closed. This means that the United States no longer produces a variety of antibiotics including penicillin locally.
In 2012, the United States passed the Generic Drug User Fee Amendments (GDUFA), making it more difficult for small and medium - sized generic drug manufacturers to survive, and they gradually withdrew from the US market. More companies transferred the production of generic drugs overseas.
In 2018, the prescription occupancy rate of generic drugs in the United States reached 90%, but the cost was only about 20% of the cost of prescription drugs. Pharmaceutical factories in New Jersey, California, and Missouri were closed.
On the other hand, the US generic drug market is highly dependent on the supply chain in India and other places. Profit - seeking competition has led to a situation where only a few Indian companies dominate the vast majority of the market.
As early as 2019, the FDA told the US Congress that among about 90 countries, Indian pharmaceutical manufacturers had the lowest passing rate in inspections.
The FDA once said that about 60% of drug shortages in the United States were related to quality issues.
When India created problems and the "cisplatin shortage" in the United States threatened the lives and treatment of many cancer patients, Chinese pharmaceutical companies filled the gap in emergency supply.
We also checked the relevant data on Sino - US trade in the past decade in "US Shortage, India's Pitfall, China's Rescue"👇
In the field of high - tech products - such as information and communication, advanced materials, optoelectronics, nuclear technology, and flexible manufacturing - the proportion of products imported from China in the total import volume of these fields in the United States has been decreasing.
For example, in 2016, Chinese exports of optoelectronic products to the United States accounted for 22.39% of the total US optoelectronic product imports that year. But by 2022, this proportion had dropped to 6.35%.
One field is an exception - the proportion of Chinese biotech products exported to the United States has been increasing.
In 2016, Chinese exports of biotech products to the United States accounted for 0.66% of the total US biotech product imports that year. By 2022, this figure had increased to 2.79%.
A report from Nikkei Chinese Net also confirmed this trend: In 2022, the US import volume of drugs from China reached $6.95 billion, about 8 times that of $0.82 billion in 2021. In just the first five months of 2023, the import volume was more than twice that of the same period in 2021.
The US Food and Drug Administration (FDA) temporarily permitted Qilu Pharmaceutical in China to export more anti - cancer drugs such as "cisplatin" to the United States to alleviate the supply shortage. In addition, a large number of immunosuppressants and circulatory system treatment drugs were also imported from China.
The United States relies on China for more than 75% of its imports of vitamins B6, B12, B1, and C, and nearly 70% of its vitamin E imports.
source: unsplash
Generic drugs are the basic drugs for every ordinary person. If innovative drugs are rated 100 points, then a qualified generic drug can be rated 80 points.
80 points can solve the treatment of most diseases for most people. As for the remaining 20 points, they will be made up for by its huge price advantage.
In the past, China's pharmaceutical industry participated in the war against diseases with generic drugs and APIs.
Now, in just a decade, China's innovative drugs have risen.
What has the industry done right? What challenges does it still need to overcome?
source: unsplash
The key turning point for China's innovative drugs occurred during the 13th Five - Year Plan period.
In the "13th Five - Year Plan for National Economic and Social Development of the People's Republic of China",