China has fundamentally reshaped the global pharmaceutical landscape through a series of aggressive pricing reforms that have seen the cost of life-saving medicines plummet by an average of 60% to 70%. This “bold move” is driven by two primary engines: Volume-Based Procurement (VBP) for generic drugs and the National Reimbursement Drug List (NRDL) negotiations for innovative therapies. The VBP program, which recently concluded its 11th round in late 2025, essentially bundles the purchasing power of the entire nation’s public hospitals to secure “guaranteed volume” for manufacturers who offer the lowest bids.
While this has successfully squeezed the “price bubble” out of generic medicines, it has also triggered intense competition that has pushed some prices down by over 90%. In 2025, Chinese authorities began adjusting these rules to prevent “abnormally low bids” that might compromise drug quality, signaling a transition from raw price-cutting to a more sustainable model that balances affordability with manufacturing integrity. For innovative, patent-protected drugs, the NRDL negotiations have become a high-stakes arena where global pharmaceutical giants must decide between high profit margins and massive market access.
This has transformed China from a “late adopter” of new drugs into a “global first” market, where innovative therapies are often approved and reimbursed years earlier than in many Western nations. The global implications of this shift are profound. China is effectively exporting “price deflation” to the pharmaceutical industry by proving that high-quality, innovative drugs can be developed and sold at a fraction of Western costs.
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This has created a surge in licensing deals, where Western companies are now acquiring Chinese-developed assets to bolster their own pipelines against looming “patent cliffs.” Furthermore, the savings generated from generic price cuts are being reinvested into a new “Commercial Insurance Innovative Drug List,” creating a multi-tiered system that supports high-end innovation while ensuring basic care remains affordable for the masses. However, this aggressive strategy is not without risks. There are growing concerns regarding the long-term sustainability of such deep price cuts for local R&D investment and the potential for supply chain vulnerabilities. As 2025 draws to a close, the “China model” stands as a disruptive blueprint for other nations struggling with rising healthcare costs, marking a definitive end to the era where medical innovation was synonymous with astronomical price tags.
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