China is the second largest pharmaceutical market on the planet. It is also one of the hardest to enter. Those two sentences have both been true for a while, but the balance between them has shifted. Ten years ago, a foreign laboratory could arrive with an off-patent product, sign a distributor, and ride the hospital channel. That route is closed. Centralised procurement crushed generic prices, the reimbursement list now trades volume against deep discounts, and Chinese biotechs have stopped being copycats. This article covers what actually remains open in 2026, and what it costs.
I am Olivier Verot, founder of Gentlemen Marketing Agency, based in Shanghai since 2012. I have spent the last eight years working with foreign pharma, dermo-cosmetic and medical device companies on the part they usually get wrong: reputation, physician awareness and patient search in China, inside advertising rules that ban most of what works in Europe. LinkedIn.
The size is real. The access is the problem.
Start with the demand side, because it has not weakened. At the end of 2025, China counted 323.38 million people aged 60 and over, and 223.65 million aged 65 and over, according to the National Bureau of Statistics. That is roughly 23% of the population over 60. The 60-plus group grew by 13.07 million in a single year. Chronic disease follows that curve: diabetes, hypertension, cardiovascular conditions, oncology.
Coverage is close to universal. The National Healthcare Security Administration reported 1.33 billion people enrolled in basic medical insurance at the end of 2025, a participation rate holding at 95% (NHSA statistical report). The old line about China moving from 60% to 90% coverage is finished. It happened. What matters now is that a single public payer sits between your product and 1.33 billion insured patients, and that payer sets the price.
This is the part foreign executives underestimate. They benchmark China against the United States, where fragmented private payers leave room to negotiate. China is closer to a single national buyer with a mandate to cut spending. Volume is enormous. Margin per unit is not.
Centralised procurement (集采) and what it did to prices
National volume-based procurement, 集采 in Chinese, is the single biggest change in this market since 2018. The mechanism is simple. Public hospitals across the country pool their annual demand for a molecule. Manufacturers bid. Winners get a guaranteed share of that pooled volume, usually 60% to 70% of national demand, in exchange for a price they would never have accepted commercially. Losers are effectively shut out of the public hospital channel.
The eleventh national round opened bids in October 2025. It covered 55 molecules across anti-infectives, antihistamines, oncology, diabetes, hypertension, lipid control and pain. Around 46,000 medical institutions declared their volumes. 445 companies submitted 794 products; 453 products from 272 companies were shortlisted. Patients started getting the new winning prices in February 2026. The details are published by the NHSA.
One change is worth reading carefully if you make generics. Earlier rounds produced prices so low that quality became a public concern. The 2025 round introduced an “anchor price” to block extreme lowball bids, a revival mechanism for bidders who missed the cut, and rules treating affiliated companies as a single bidder to prevent collusion. Products with a national market under 100 million RMB were excluded from the tender altogether. Xinhua described the intent as stabilising clinical supply and protecting quality rather than pushing prices lower.
What this means for a foreign laboratory: if your product is an off-patent small molecule or a commoditised high-value consumable, assume it will be tendered, assume the winning price will sit far below your European or American price, and assume a local manufacturer with a domestic cost base will underbid you. Several multinationals have simply declined to bid and given up the hospital channel for those products. That is a defensible decision. It is not a defeat if the rest of your portfolio is where the value is.
The NRDL: volume in exchange for a price cut
The second gate is the National Reimbursement Drug List, renegotiated every year. Getting on it means your product is reimbursed and prescribed nationwide. It also means accepting a price cut that is rarely small.
The 2025 cycle added 114 new drugs to the basic list, 50 of them Class 1 innovative products, bringing the catalogue to 3,253 entries. Average price concessions in the 2025 negotiation exceeded 60%. Hospitals had to finalise their internal formularies through pharmacy committees by 28 February 2026, which is a detail worth noting: being on the NRDL does not automatically put you on a hospital’s shelf. That is a separate battle, hospital by hospital.
The genuinely new element is the Commercial Health Insurance Innovative Drug Catalogue, launched alongside the 2025 basic list. It opened with 19 drugs, 10 of them from foreign companies. Products on this list are reimbursed through commercial insurance rather than the basic fund, and they escape three constraints: out-of-pocket ratio caps, generic substitution monitoring, and the DRG/DIP hospital budget ceilings. In plain terms, China built a second door for expensive breakthrough therapies so that pricing them does not require gutting the global price. Cell therapies and Alzheimer’s treatments were among the first through it.
If you sell an innovative therapy, this dual system is the strategic question of the next three years. Basic NRDL buys you 95% population coverage at a punishing price. The commercial catalogue protects your price reference but reaches a much smaller insured base. Pick deliberately, and model the global price spillover before you negotiate.
The four access routes, side by side
| Route | Who pays | Price pressure | Realistic fit |
|---|---|---|---|
| National volume-based procurement (集采) | Basic medical insurance, via public hospitals | Extreme. Winning bids often 70% to 90% below launch price | Generics, mature molecules, standard consumables. Local cost base wins |
| Basic NRDL negotiation | Basic medical insurance fund | Heavy. Over 60% average cut in the 2025 round | Innovative drugs seeking national volume, willing to accept a low China reference price |
| Commercial insurance innovative drug catalogue | Private health insurers | Moderate. Case-by-case pricing, outside DRG/DIP caps | Breakthrough therapies, cell and gene, rare disease, high-cost oncology |
| Self-pay: private hospitals, international clinics, retail and online pharmacy | The patient | Set by the market | Dermo-cosmetics, OTC, non-reimbursed innovation, prevention and screening |
NMPA registration and local clinical data
The old complaint about China was the approval timeline. Five years or more, on top of a European or American file. That complaint is out of date. China joined ICH in 2017, accepts foreign clinical data under conditions, and now runs priority review, breakthrough therapy designation and conditional approval pathways.
The numbers show the shift. In the first half of 2025 alone, the Center for Drug Evaluation accepted 6,213 filings, up 15.83% year on year, and completed 5,848 reviews. Across the full year, NMPA approved 76 Class 1 innovative drugs. Of those, 26 went through priority review, 15 were conditional approvals and 15 had breakthrough therapy status during trials. For Class 1 innovative applications, the IND approval rate ran around 95% and the NDA approval rate around 89%.
Two practical points remain. First, foreign clinical data is accepted but ethnic sensitivity questions still trigger requests for Chinese subjects, so a bridging study or participation in a multi-regional trial is normal, not exceptional. Second, running trials in China is now fast and comparatively cheap, with large patient pools for oncology in particular. Several European mid-caps I have talked to now start their China trial earlier than their US one, purely on recruitment speed.
Chinese biotechs are now sellers, not copycats
For years the standard line was that Chinese players copied existing innovation and lacked the R&D to build their own. That was fair in 2017. It is wrong now, and the reversal is the most important thing to understand about this market.
In 2025, Chinese biopharma companies signed 157 out-licensing deals with foreign partners, for a headline value of around 135.7 billion US dollars, up 161% on the previous year, with roughly 7 billion dollars in upfront payments. For the first time, China accounted for close to half of global out-licensing value. Chinese biotechs are no longer licensing molecules in. They are licensing them out, to Western pharma, at scale. Hengrui alone closed five out-licensing deals in the first three quarters of 2025.
Two caveats before anyone reads this as a pure success story. Chinese assets are still valued at around 60% of comparable global assets, and around 40% of deals signed between 2020 and 2022 were later terminated. The pipeline is also crowded: analysts put me-too and fast-follower molecules at close to 70% of Chinese innovation, with genuine first-in-class assets around 21%. Quantity is not the same as differentiation.
The consequence for a foreign laboratory is that partnership is now bidirectional. Ten years ago you brought the science and the local partner brought distribution. Today you may be the licensee, paying for a Chinese ADC or bispecific. Either way, the negotiation is very different from what most European business development teams are trained for. If that is your situation, our guide on how to negotiate with Chinese partners is worth reading before the first meeting.
What is still open to a foreign laboratory
Real innovation, not incremental improvement
Anything that a Chinese competitor cannot replicate within three years still commands a price. That is the whole logic behind the commercial insurance catalogue. First-in-class mechanisms, complex biologics, cell and gene therapy, delivery platforms that are hard to copy.
Rare disease
China has published successive national rare disease catalogues and has created dedicated registration and reimbursement channels around them. The patient populations are small in percentage terms and very large in absolute numbers, which is exactly the arithmetic that makes an orphan drug work in China. Domestic competition here is thin.
Oncology, but only where the field is not saturated
Oncology is the largest innovative segment and the most crowded. PD-1 in China is a commodity. Going in with a me-too checkpoint inhibitor is a waste of capital. Going in with a differentiated combination, a rare tumour indication, or a companion diagnostic is a different conversation.
Cross-licensing
Give a Chinese partner ex-China rights on one asset, take China rights on another. This structure has become common because it fixes both sides’ weakness at once. It also gets you a local partner who is motivated rather than merely contracted.
Self-pay categories
Dermo-cosmetics, OTC, supplements, prevention, screening, aesthetics. No tender, no reimbursement negotiation, and consumer marketing actually works. This is where most of our own client work sits, and it is covered in more depth in our overview of the healthcare market in China.
Distribution is still fragmented, and online is eating retail
Pharmaceutical distribution in China remains complex and layered. Multiple intermediaries sit between a manufacturer and a pharmacist, which historically inflated prices and made supply chains opaque. Consolidation has progressed since 2017 but the tail is still long, and the problems distributors face are documented in our article on the difficulties encountered by pharmaceutical distributors in China.
The retail side is moving online fast. In 2024, the Chinese drug retail terminal, physical plus online pharmacies, reached about 574 billion RMB in sales, of which online pharmacies accounted for roughly 75.8 billion RMB in drug sales, growing 14.4%. The real accelerator is policy rather than consumer habit: provinces have progressively opened medical insurance settlement to online pharmacy platforms, and prescription outflow from hospitals to retail has been encouraged. When insurance reimbursement works on a phone, the channel stops being a convenience play. We detail how the channel operates in our guide to online pharmacy in China.
Chinese patients research heavily before buying. After the health scandals of the past fifteen years, they check the manufacturer, the origin, the batch, and what other patients say. Corporate reputation is not a soft asset in this category. It is a purchase criterion.
Advertising rules: what you can and cannot say
Pharma advertising in China is tightly controlled and the enforcement is real. Prescription drug advertising to the general public is prohibited. Advertisements cannot use medical experts, doctors, pharmacists or patients as endorsers, cannot use patient testimonials, and cannot claim or imply a cure rate or efficacy guarantee. Drug, medical device and health food advertising must be approved by the provincial drug administration before it runs, and the State Administration for Market Regulation enforces the content rules.
Platforms enforce this before the regulator does. Baidu, WeChat, Douyin and Xiaohongshu all require sector qualification documents before they will accept an account or an ad in this category, and their review teams reject copy that would probably pass in Europe. Budgeting for a campaign without budgeting for the qualification file is the most common planning mistake I see.
Where decision makers and patients actually look now
Three shifts matter for anyone doing communication in this sector.
Generative engines are the new first stop. DeepSeek and Doubao are now used routinely to answer health and product questions. These models answer from indexed Chinese-language sources: Baidu results, Baike entries, Zhihu threads, industry media, company sites hosted in China. If nothing credible about your company exists in Chinese, the model fills the gap with your competitor. The fix is unglamorous. Publish structured, factual, Chinese-language content about your company, your molecules and your registrations, get it indexed, and keep it consistent across sources. This is the same discipline as SEO, applied to what a model retrieves. Our piece on AI in healthcare in China covers how far the sector has gone with this.
Xiaohongshu is where health decisions get discussed. Not for prescription drugs, which are off limits, but for dermo-cosmetics, supplements, screening, women’s health, elderly care. The mechanism is search, not feed. Users type a symptom or a product category into the app and read what real users wrote. A brand with zero notes in Xiaohongshu has zero presence in that decision. Seeding with KOCs, real users with small audiences and credible tone, works better here than a single large KOL post, and it costs less.
WeChat private domain replaces the sales rep visit. Hospital access rules have restricted rep visits for years. Meanwhile a medical affairs team can run a WeChat service account and physician groups, publish disease education, and answer questions with named, qualified staff. It is slow, it does not produce a dashboard metric in month one, and it is the only channel where you own the relationship rather than renting it from a platform. For the broader mechanics, see our overview of medical and pharmacy marketing best practices in China.
A Finnish case: Annika
Annika runs international business development for a Finnish company with two lines: a small hospital-channel generic portfolio and a dermatological range sold in pharmacies. She came to us in 2024 after three years in China that had produced almost nothing.
The numbers were blunt. The generic line had been priced out of two provincial tenders and lost the hospital channel entirely. The dermatological range was listed on Tmall Global, had spent about 180,000 euros over two years on platform advertising, and was converting at under 0.4%. Total China revenue was around 260,000 euros a year against a country budget of roughly 400,000.
What had been tried and failed: a distributor-led push on the generics, which no distributor could rescue because the problem was the tender price, not the sales effort. Then paid traffic on the dermatological range, which brought visitors who had never heard of the brand, found no Chinese-language information about it anywhere, and left.
What we changed. First, we told her to stop bidding on the generics and reallocate that budget. That was the largest single gain and it required no marketing at all. Second, we treated the dermatological range as a self-pay consumer product, not a pharma product: a China-hosted site in Chinese, a Baidu Baike entry, Zhihu answers on Nordic dermatological formulation, and a steady flow of Xiaohongshu notes from around forty KOCs with genuine sensitive-skin profiles. Third, we filed the health-category qualification on Xiaohongshu and Douyin before spending anything, which took eleven weeks. Why it worked: buyers in this category search before they buy, and they search on Xiaohongshu and Baidu, not on Tmall. Annika’s paid traffic had been arriving at an empty room.
Fourteen months later, the dermatological line was at about 640,000 euros annualised, conversion on the Tmall Global store had moved from 0.4% to 1.6%, and the cost per acquisition had fallen by just under half. The generic line stayed out of the hospital channel. That was the correct outcome.
Why European pharmacy brands still travel well
Foreign origin still signals quality and safety in this category, and the effect is strongest in dermatology. French pharmacy brands built that association first: thermal spring water, the white coat, the idea that a pharmacist gives advice rather than sells. Chinese tourists carried those products home for a decade before the brands ever opened a Tmall store. Nordic and German brands have followed the same path with a cleaner, more clinical positioning.
The advantage is not permanent. Chinese dermo-cosmetic brands like Winona and Dr. Yu built serious clinical credibility and now hold real share in sensitive skin. Country of origin buys you attention. It no longer buys you the sale. And in adjacent regulated B2B sectors the same pattern holds, as we found writing about environmental technology opportunities in China: technical superiority has to be demonstrated in Chinese, in public, or it does not exist.
FAQ
Is it still worth entering China with a generic drug?
For the public hospital channel, usually no, unless you have a local manufacturing cost base. Eleven national procurement rounds have set reference prices that a European manufacturer cannot match. There are exceptions: molecules with a national market under 100 million RMB were excluded from the 2025 tender, and a generic with a genuine differentiator, a different route of administration or a real formulation advantage, can still find room in retail and online pharmacy where pricing is free.
Should we push for the NRDL or stay self-pay?
It depends on what your China price does to your global reference price. Basic NRDL listing gives national reimbursement and huge volume, at an average concession above 60% in the 2025 round. The commercial insurance innovative drug catalogue launched in 2025 is the middle path: it protects pricing and sits outside hospital budget caps, but the insured base is far smaller. Model both, including the international price spillover, before you enter the negotiation room.
How long does NMPA registration actually take now?
Far less than the five years people still quote. China has been an ICH member since 2017 and accepts foreign clinical data under conditions. In 2025 the NMPA approved 76 Class 1 innovative drugs, 26 of them through priority review and 15 through conditional approval. Plan for bridging data or a multi-regional trial including Chinese subjects, and treat CDE communication as a workstream with dedicated local regulatory staff, not an administrative task.
Can we advertise a prescription drug in China?
No. Advertising prescription drugs to the general public is prohibited. You cannot use doctors, pharmacists or patients as endorsers, and you cannot claim efficacy or cure rates. Drug and medical device advertising requires prior approval from the provincial drug administration. What is permitted is disease education, corporate communication, scientific content aimed at healthcare professionals through qualified channels, and full consumer marketing on non-drug categories such as dermo-cosmetics and OTC, subject to platform qualification.
Who is Gentlemen Marketing Agency?
We are a digital marketing agency based in Shanghai, working on the communication side of health: reputation, Chinese-language visibility, physician and patient search, e-commerce for self-pay categories. We do not handle registration, tender filing or reimbursement negotiation, and we will tell you when a problem belongs to a regulatory consultant instead of to us. If you want an honest read on what your product can realistically do in China, contact us.
