Leading High-Quality Development of the Pharmaceutical Industry through Innovation and Reform

Leading High-Quality Development of the Pharmaceutical Industry through Innovation and Reform

Reflections on Pharmaceutical Policies in the 2025 Government Work Report

The 2025 Government Work Report demonstrates the state’s strong emphasis on the pharmaceutical industry and its determination to promote high-quality development. From innovative drug pricing mechanisms to the modernization of traditional Chinese medicine (TCM), from expanding primary healthcare resources to reforming the medical insurance payment system, a series of policy measures not only respond to current industry pain points but also send a clear signal of advancing the sector toward higher-quality growth.

Development of Innovative Drugs

Policy empowerment to accelerate industrial upgrading

Innovative drugs represent the core competitiveness of the pharmaceutical industry and are essential to meeting clinical needs. The report proposes to “improve the drug pricing formation mechanism and establish a directory of innovative drugs.” For the first time, innovative drugs are incorporated into top-level design in the form of a directory, marking the beginning of systematic national support for pharmaceutical innovation. Policies such as tiered pricing and price protection periods will balance the reasonable returns of enterprises with patient accessibility.

In 2025, the first edition of the “Category C Drug Directory” will be published. This directory is designed to break through the limitations of “basic coverage” under medical insurance. By introducing commercial insurance negotiations to cover high-priced innovative drugs, it will help establish a multi-level payment system and accelerate the commercialization of innovative medicines. This approach will not only ease the industry’s dilemma of “high R&D investment and long return cycles,” but also encourage enterprises to enter high-end areas such as original research drugs and breakthrough therapies.

Reform of the Medical Insurance System

Safeguarding livelihoods and improving accessibility

The medical insurance system is a vital safeguard for people’s health. The Government Work Report emphasizes increasing fiscal support, raising per capita government subsidies for basic medical insurance and essential public health services. This move will further reduce the burden on patients and enable broader access to quality healthcare.

The report also proposes to “optimize drug and medical consumables procurement policies, strengthen quality evaluation and supervision,” signaling that healthcare reform has entered a phase of refined development. At the national level, the 11th round of centralized drug procurement will be launched in the first half of 2025, followed by the 6th batch of high-value medical consumables in the second half, with new procurement batches introduced in due course. At the local level, around 20 specialized national procurement alliances are expected to be established.

Moreover, the report highlights the full establishment of a drug and consumables traceability mechanism and stricter supervision of the medical insurance fund. All products involved in centralized procurement will be required to carry traceability codes, ensuring “coded procurement” and guaranteeing the safe and transparent use of medical insurance funds.

Reform of Medical Services

Optimizing resource allocation and improving service efficiency

Medical service reform is crucial to addressing the issues of “difficult and expensive access to healthcare.” The Government Work Report emphasizes deepening public hospital reform guided by public welfare and expanding the reach of quality medical resources to lower-level institutions.

Through measures such as improving hospital facilities, enhancing diagnostic conditions, and establishing service-oriented pricing mechanisms to replace the “drug mark-up” model, reforms will better reflect the value of medical professionals’ labor while providing patients with more affordable quality services. These efforts will help further improve both the quality and efficiency of healthcare services.

Inheritance and Innovation of Traditional Chinese Medicine

Staying true to tradition while embracing innovation

Traditional Chinese medicine (TCM) is both a cultural treasure and an important part of the pharmaceutical industry. The Government Work Report once again underscores the inheritance and innovation of TCM, calling for the promotion of “high-quality development of TCM undertakings and industries.” The focus has shifted from “system building” to “quality-driven development,” with integration of traditional theories and modern technology at its core.

By advancing standardized production (such as formula granules), developing classical prescriptions, and applying AI-assisted syndrome differentiation and treatment, TCM services will be further upgraded. In chronic disease management and elderly care, the synergistic effect between TCM and the silver economy will become more prominent. For instance, the certification and promotion of specialties such as acupuncture, massage, geriatric diseases, and oncology will broaden TCM applications in primary healthcare.

High-Quality Development of the Pharmaceutical Industry

Collaborative efforts to foster new quality productive forces

The Government Work Report states the need to “promote coordinated development and governance of healthcare, medical insurance, and pharmaceuticals,” placing healthcare at the forefront. This reflects full respect for the inherent laws of medical development and sets the goal of meeting people’s demand for “quality medical care and medicines” as the core of such coordination.

From innovative drug R&D to grassroots healthcare delivery, from pricing mechanism reforms to improved payment systems, policy measures are closely linked, forming a governance framework where “healthcare, medical insurance, and pharmaceuticals” work in synergy. This integrated approach will provide strong momentum for building new quality productive forces in the pharmaceutical industry.

Overall, the Government Work Report’s comprehensive deployment reflects a people-centered development philosophy, underscoring the state’s strong commitment to the high-quality growth of the pharmaceutical sector. Under policy guidance, China’s pharmaceutical industry is set to embrace new opportunities for development.