How China rewrote the rules of drug innovation

THE continuous stream of drug approvals by Chinese pharmaceutical companies should be a source of awe to any global innovation investor. Key to this is the transformation of China’s drug approval policy – one of the most underdiscussed and massively impactful policy narratives of our era.

For decades, the global pharmaceutical industry was a Western monologue. The US, through the Food and Drug Administration and the National Institutes of Health, served as the world’s laboratory. China entered later as the world’s factory, massive but fundamentally replicative, designed to produce volume rather than value. Domestically, China continued to suffer from a regulatory lag so severe that it functioned as a trade barrier; drugs invented in Boston or Basel would arrive in Beijing five to seven years later. This “China-Last” penalty rendered Chinese patients a secondary consideration in global research calculations.

That era is demonstrably over. It ended with a calculated, statutory and industrial restructuring of the Chinese state’s relationship with biology. We are witnessing the results of a decade-long project of “Acceleration by Design”, a deliberate strategy to transform the regulatory review process from a discretionary gatekeeping function into a mandatory conveyance system for innovation.

The data confirms a tectonic shift. In 2024, China’s National Medical Products Administration approved 83 new drugs (excluding traditional Chinese medicine), a 12 per cent year-on-year increase, significantly outpacing the US Food and Drug Administration (FDA)’s 50 novel medicines. Of these, 46 were Class 1 innovative drugs never marketed anywhere before, while 48 qualified as first-in-class by mechanism, including high-complexity modalities such as bispecific antibodies, antibody-drug conjugates, and novel small molecules. Average review times collapsed from 663 days in 2017 to approximately 105 days in 2024. This is a staggering 84 per cent reduction in less than a decade.

Speed written into law

The decisive shift occurred with the 2019 revision of China’s Drug Administration Law, the most comprehensive overhaul since 1984. Unlike the West, where accelerated approvals remain discretionary privileges subject to negotiation, China embedded expedited pathways directly into statute through legally binding timelines and explicit caps on review durations.

This was consequential because bureaucratic systems operate at the pace they are institutionally compelled to maintain. Once timelines were enshrined in law, delay was reclassified from regulatory caution to non-compliance. The share of expedited approvals rose from effectively zero in 2017 to over 90 per cent by 2024. Meanwhile, the FDA’s review times have lengthened to 356 days, driven by structural complexity and post-pandemic administrative backlogs. The trajectories are diverging.

A key mechanism in the Chinese system is the 60-day clock for clinical trial reviews. If regulators raise no objections within this window, trials may proceed automatically. This is the “silent approval” mechanism. Behavioural economists have long understood that defaults shape outcomes more powerfully than preferences; China applied this logic to drug regulation, where inaction by the regulator results in approval, not delay.

In practice, pre-submission consultations compress timelines further. Companies engage reviewers beforehand to address toxicology, dosing, and trial design. The formal submission becomes a validated formality, with many applications clearing within one to three weeks.

Capacity before speed

The unglamorous but crucial reform was this: China rebuilt regulatory capacity before demanding speed. Most jurisdictions pursue acceleration first and scramble for capacity later. China inverted this sequence.

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Between 2014 and 2024, the Chinese Centre for Drug Evaluation expanded from fewer than 200 reviewers to over 1,300 staff in less than a decade. Recruitment was qualitative, not merely quantitative. The agency recruited PhDs from American and European pharmaceutical companies, bringing deep domain expertise alongside throughput. The original four generic divisions gave way to 12 specialised centres organised by therapeutic area. CAR-T therapy (cancer treatment) products are now reviewed by dedicated cell and gene therapy teams, achieving decisions in under 60 days.

Parallel processing transformed workflows. Clinical, manufacturing, and toxicological assessments now proceed concurrently rather than sequentially, eliminating the dead time between review stages. The “China Speed” phenomenon is not an artifact of lax standards but of procedural engineering.

Before 2018, China required repetitive studies for each new drug, even when comparable studies existed elsewhere. Following China’s accession to the International Council for Harmonisation in 2017, reforms enabled the acceptance of foreign clinical data, transforming drug development from a sequential, years-long pathway into simultaneous global development.

Ending the China-Last penalty

Chinese-only trials historically faced acceptance challenges abroad; the FDA’s concerns about single-country data created friction. China’s response was not to fight these barriers but to render them less consequential. By expanding participation in multi-regional clinical trials from just two drugs between 2015 and 2017 to 48 between 2018 and 2024, Chinese innovators gained access to global trial infrastructure.

More critically, the acceleration of domestic approvals means Chinese companies can secure home-market approval first, generating revenue and clinical credibility while global registration proceeds in parallel. 

A two-to-three-year lead time in a market of 1.4 billion patients is not a consolation prize but a strategic asset. As was the case with many electronics in North Asia, early launches in home markets serve as laboratory test cases before global roll-outs.

End-to-end incentive alignment

China’s transition from generics to innovation reflects coordinated policy architecture across regulatory, reimbursement, pricing, and capital layers. The National Reimbursement Drug List introduced fast-track pathways that allow breakthrough therapies to achieve national insurance coverage within six to 12 months of approval. The Volume-Based Procurement programme, while brutally price-eroding for generics, explicitly exempted Class 1 innovative drugs for the first five years, preserving premium pricing and returns on investment.

State-backed funds co-invested alongside private venture capital, with biotech funding increasing from US$2.1 billion in 2017 to a peak of US$15 billion to US$19 billion in 2021 before stabilising to about US$7.3 billion in 2024. The growth of high-quality domestic contract manufacturers eliminated production bottlenecks. Together, these aligned policies transformed innovation from a high-risk, low-return activity into a financially viable, strategically rewarded endeavour.

Artificial intelligence as infrastructure

While Western regulators debate the explainability of artificial intelligence (AI) in drug discovery, China has moved to treat AI as essential infrastructure. The inflection point was the 2022 Technical Guidelines for the Use of AI in Drug R&D, which provided binding rules for how AI-generated data can support regulatory submissions. The guidelines accept AI for target identification, molecule design, and pharmacokinetic prediction, requiring audit trails rather than demanding full algorithmic transparency.

Validation came in 2024 to 2025 when Insilico Medicine reported positive Phase IIa results for rentosertib, a drug for idiopathic pulmonary fibrosis (a serious chronic lung disease) entirely discovered and designed by AI. Target identification, molecule generation, and development candidate selection were all performed by algorithms. Rentosertib represents the first concept-to-clinical-proof validation of generative AI in drug discovery.

It occurred in China not merely because of the technology but because the regulatory environment permitted a rapid transition from computational models to human trials. Behind this sits a broader national project: petaflop-scale (ultra-high performance) supercomputing hubs and centralised medical data aggregation to train the next generation of biological models.

Geopolitical friction

China’s rapid ascent has triggered defensive responses. The US’ Biosecure Act targets Chinese contract manufacturers that facilitated much of the West’s own drug development capacity. These contract companies employ tens of thousands of chemists in concentrations of talent that simply do not exist elsewhere. While the full impact of such actions remains uncertain, it signals the end of the integrated global life sciences supply chain that prevailed for two decades. 

We may be entering a period of bifurcated pharmaceutical ecosystems: one sphere optimising for precaution and price protection, another optimising for velocity and volume. Chinese contract manufacturers are already building capacity in Singapore, Ireland and Germany to navigate these restrictions.

The competitive landscape

The contrast with global pharmaceutical giants is stark: while Western companies haemorrhage value to patent cliffs and endure long review timelines, Chinese innovators operate within a system explicitly engineered to compress time-to-market. Senior policymakers framed dependence on foreign pharmaceuticals as a national security vulnerability and embedded regulatory reform within a coordinated state strategy spanning healthcare, industry, and science ministries.

China’s domestic market is hypercompetitive. Dozens of companies race across overlapping therapeutic targets, compressing margins and forcing relentless cost discipline. This brutality ensures that Chinese innovators retain cost leadership once applied to generics, now extending to novel biologics and first-in-class mechanisms. When a Chinese bispecific antibody reaches global markets, it arrives battle-tested on price.

Purists will worry about risks. Faster approvals inevitably mean more conditional authorisations and greater reliance on surrogate endpoints. Some drugs will disappoint. But in an era where AI-driven drug discovery accelerates candidate generation faster than traditional systems can evaluate them, regulatory velocity becomes a binding constraint. Chinese regulations position local companies to operate at the tempo technology now permits.

If Chinese companies have yet to achieve a defining global blockbuster, the infrastructure for such a win is now operational. Capacity has been built. Incentives are aligned. Speed has been codified. The question is no longer whether China can innovate pharmaceutically. It is whether legacy systems elsewhere can adapt to a world where China-first is increasingly the competitive default.

The writer wrote this article during an internship at GenInnov, an innovation-focused asset management firm in Singapore that has pioneered the use of generative AI across investment processes. Sidharth Mishra and Adit Mathew provided guidance.