Insights from China's Top 10 Pharma Leaders at the Two Sessions: Industry Trends and Policy Proposals

The annual “Two Sessions” serve as a bellwether for China’s economic landscape, with widely discussed proposals and motions often driving the development of entire industries. In the pharmaceutical and healthcare sector, topics that have gained significant traction in recent years—such as internet healthcare, online hospitals, pharmaceutical e-commerce, mobile health, and tiered diagnosis and treatment—have been frequently mentioned during the Two Sessions. So, what did leading figures in the pharmaceutical industry say at this year’s Two Sessions? Were there any new “top-level directives”?

VCBeat (WeChat ID: vcbeat) has compiled a collection of perspectives from ten pharmaceutical and healthcare industry leaders on the Two Sessions, covering the key trends most closely watched by the sector.

As China enters an aging society, the number of elderly individuals with disabilities or partial disabilities requiring long-term care is rapidly increasing. Guo Guangchang submitted a proposal on launching pilot programs for long-term care insurance at a high starting point and with high standards. He stated that policies related to the long-term care insurance pilots should be further refined, criteria for designating participating institutions should be improved, and commercial insurance companies should be engaged to administer the programs, drawing on experiences from pilot regions. Additionally, he encouraged the introduction of commercial long-term care insurance products to provide supplementary coverage.

Guo Guangchang pointed out that the insufficient number of integrated medical and elderly care institutions and beds has led to a large number of elderly patients occupying hospital beds. Due to restrictions in payment policies, these patients frequently undergo admission and discharge procedures. Moreover, a significant number of elderly individuals in urgent need of medical nursing care are unable to receive the proper care they deserve. However, in the face of this massive demand, while a substantial amount of social capital is eager to enter the sector, it finds “no way in.” On the other hand, the cumbersome approval processes for establishing integrated medical and elderly care institutions severely hinder the development of the medical-elderly care service industry.

Based on this, Guo Guangchang recommends relaxing planning and bed management regulations for medical institutions integrating medical care with elderly care that are established by social capital; any institution meeting the established standards should be approved for construction. He also suggests simplifying the approval procedures for such institutions, encouraging socially funded medical-elderly care facilities to establish collaborative partnerships with nearby large urban hospitals, and allowing these institutions to optimize or reduce the number of required clinical departments.

The protection of ethnic medicines is a highly controversial topic in the modernization process of traditional Chinese medicine (TCM). On one hand, the modernization of TCM can promote the development of the industry; on the other hand, many non-standardizable drugs and therapies have been overlooked.

Lei Jufang, Chairwoman of Tibet Cheezheng Tibetan Medicine Co., Ltd., submitted a series of proposals themed on leveraging the distinctive features of ethnic medicine and permitting the retention of characteristic development approaches for common dosage forms of ethnic medicines.

Lei Jufang stated that the modernization of Tibetan medicine lags far behind that of Traditional Chinese Medicine (TCM); therefore, the same standards should not be applied to evaluate dosage form modifications for both. For instance, Tibetan medicines are predominantly administered in solid forms such as pills and powders at low doses, making them well-suited for traditional processing into dosage forms like pills, tablets, and capsules. Furthermore, as topical administration is a distinctive feature of Tibetan medicine, efforts should be made to preserve its classic topical formulations to facilitate heritage transmission and safeguard its unique characteristics.

Wu Yiling, Chairman of Yiling Pharmaceutical Group, submitted a proposal to encourage the research and development of traditional Chinese medicine (TCM)-based health supplements. He stated that greater support should be provided for the development of TCM-based health supplements to promote the growth of the TCM big health industry and to encourage the export of TCM-based health food products to overseas markets.

Wu Yiling believes that, on the basis of the existing 27 health functions, the scope of functional claims for health foods should be expanded to include TCM terminology grounded in Traditional Chinese Medicine (TCM) theory, thereby highlighting the unique advantages of Chinese herbal medicines. Examples of such additions include functions like “tonifying the middle jiao,” “replenishing qi,” and “strengthening zheng qi.” Meanwhile, in accordance with the characteristics of TCM, the target populations for TCM-based health foods should be categorized by syndrome patterns, such as qi deficiency, blood deficiency, and yin deficiency.

In terms of efficacy evaluation, Wu Yiling believes that the theories of Traditional Chinese Medicine (TCM) and modern medicine should be integrated. Safety evaluation should adopt the acute and chronic toxicity tests commonly used for health supplements. For efficacy evaluation, if it is difficult to establish animal experimental models corresponding to specific TCM symptoms, human dietary intervention trials may be directly conducted under the premise of ensuring safety. Alternatively, literature research may be used to replace efficacy experiments for some classic proven prescriptions recorded in traditional TCM classics.

Geng Funeng pointed out that since the state liberalized drug prices, the prices of certain drugs have risen, with raw material monopolies being one of the major factors contributing to this increase. To address monopolistic practices in active pharmaceutical ingredients (APIs), Geng Funeng recommended that relevant authorities improve and enforce the Anti-Monopoly Law, enact an Anti-Profiteering Law, and immediately revoke and cancel approval numbers for traditional Chinese medicine (natural medicine) extracts, thereby banning them. Meanwhile, the government should implement price interventions (such as government-set pricing) and mandate mass production targets for certain APIs, while establishing a registration and market access system to encourage API development.

In recent years, although the National Medical Products Administration has intensified quality control efforts for Chinese herbal medicines, quality and safety incidents remain frequent, posing significant safety risks. Geng Funeng recommends establishing a germplasm resource database based on the species sources of Chinese herbal medicines published by the Pharmacopoeia Commission, with all germplasm and seedlings sourced from this repository to ensure stable and uniform origins for cultivation and breeding. Additionally, he proposes establishing centralized distribution hubs for Chinese herbal medicine cultivation and breeding bases to replace traditional agricultural market transactions, thereby ensuring product quality.

In many impoverished regions, the air, water, and soil are highly suitable for cultivating Chinese herbal medicines. Geng Funeng recommends vigorously developing the cultivation of Chinese herbal medicines in these areas as part of industry-based poverty alleviation initiatives. Many Chinese herbal medicines carry high added value, which can not only increase farmers’ incomes but also promote the development of Traditional Chinese Medicine (TCM) and enhance the quality of herbal materials.

The General Office of the State Council issued the “Several Opinions on Further Reforming and Improving Policies for Drug Production, Circulation, and Use,” which has charted a course for enhancing drug supply standards and advancing the “Internet + Drug Distribution” model. Yang Wenlong noted that against the backdrop of the “Internet+” era, it is essential to leverage traditional resources effectively and build innovative internet-based enterprises.

Regarding the standardization of retail pharmacies in promoting internet-based services, Yang Wenlong expressed hope that relevant regulations would be introduced as soon as possible to foster the development of online-to-offline (O2O) pharmaceutical retail, alleviate the medication burden on the public, and improve the national healthcare service system. He suggested gradually promoting electronic prescriptions via the internet, lifting restrictions on the online purchase of prescription drugs in phases, with priority given to medications for chronic diseases requiring long-term use. Furthermore, he called for researching and implementing medical insurance reimbursement policies for online drug sales, as well as piloting and rolling out mobile medical insurance payment solutions, thereby creating a favorable competitive environment for the development of internet-based pharmaceutical services.

Furthermore, Yang Wenlong noted that the current regulatory framework does not fully reflect the characteristics of over-the-counter (OTC) drugs. The management of OTC and prescription drugs remains somewhat ambiguous, lacking differentiated oversight. OTC drugs are subject to registration, reimbursement, labeling, and usage instructions that are as stringent as those for prescription drugs. This restricts innovation in the OTC sector, hindering its development and ability to compete internationally.

Yang Wenlong suggests that, in accordance with China’s drug classification management system and its overarching requirements, a registration and regulatory framework distinct from that for prescription and non-prescription drugs should be established. This framework primarily includes: (1) establishing an independent registration category for over-the-counter (OTC) drugs based on their specific research characteristics; (2) formulating registration and approval requirements tailored to the features of OTC drugs; (3) developing dual-pathway conversion mechanisms and technical guidelines for switching between prescription and OTC status; and (4) enacting regulations on packaging and labeling that align with the characteristics of OTC drugs and encourage brand development.

At the 2017 Two Sessions, Ding Lieming submitted multiple proposals focusing on hot topics such as drug shortages caused by “secondary bargaining” in pharmaceutical procurement and shortages of medications for rare diseases.

Shortages of essential, low-cost medications for patients’ daily needs have drawn significant attention. Ding Lieming suggests that resolving the shortage of commonly used, affordable drugs requires further improvement of the centralized drug procurement and bidding system, standardization of drug bidding and tendering practices, and implementation of volume-based pricing, quantity-linked pricing, budgeted procurement, and unified distribution, thereby institutionally eliminating “secondary price negotiations.” Meanwhile, comprehensive implementation of information disclosure systems for pharmaceuticals and hospitals should be promoted, along with the establishment of a unified cross-departmental price information platform to enhance transparency in drug market pricing.

Detailed implementation rules aligned with the Law on Traditional Chinese Medicine (TCM) have yet to be issued, making the practical enforcement of the Law a further focal point of intense discussion within the industry. Li Zhenjiang suggests that relevant ministries and commissions, as well as provincial and municipal authorities, should accelerate the development of supporting regulations and detailed implementation rules. These should address the protection of TCM resources, registration of classical prescriptions, technical standards for the cultivation, breeding, collection, and storage of Chinese herbal materials, guidelines for TCM-based health preservation and care, filing-based management of TCM clinics, and categorized assessments for practitioners trained through apprenticeship and those with proven expertise, thereby ensuring the comprehensive implementation of all provisions of the Law.

Secondly, all provinces and municipalities must promptly revise their existing rules and regulations in accordance with the TCM Law to uphold its authority. Thirdly, in the process of formulating detailed implementation rules for the TCM Law, extensive input should be solicited from the industry, sector, and enterprises to ensure the effective implementation of the TCM Law.

Li Zhenjiang also called on relevant national authorities to promptly improve and unify provincial policies on low-priced medicines. It is recommended that the price regulation department of the National Development and Reform Commission (NDRC) gain a thorough understanding of the practical issues encountered in drug production, distribution, and the tendering and procurement processes on provincial purchasing platforms. In line with the State Council’s guidelines on streamlining administration, delegating power, and effectively transforming government functions, such measures would help unleash market vitality and promote economic development. Provincial price regulatory authorities should be urged to promptly refine and harmonize their low-priced drug policies, establish mechanisms for the inclusion and removal of drugs from the low-priced drug list, ensure timely acceptance and rigorous review of applications, and guarantee an adequate supply of low-priced medicines.

Xie Zilong called for the legal management of licensed pharmacists and strict enforcement of professional qualification access. While legislation has been enacted to implement professional qualifications for medical personnel, it is imperative to promptly enact the Licensed Pharmacists Law, making it urgent to bring licensed pharmacists under a rule-of-law framework.

Online pharmaceutical sales face challenges such as broad business scope, high concealment, and difficulties in control, evidence collection, and regulation, resulting in ineffective oversight of online drug transactions. Xie Zilong pointed out that the Measures for the Administration of Online Transactions, issued only as a decree by the State Administration for Industry and Commerce, holds a relatively low legislative status. Furthermore, it provides only general provisions on the obligations of online commodity sellers and related service providers, along with specific provisions for third-party trading platform operators, making it poorly suited for special commodities such as pharmaceuticals. Therefore, he proposed enacting a dedicated Law on Online Pharmaceutical Transactions.

With the development of the socialist market economy and the deepening reform of China’s political and economic systems, the current Drug Administration Law has gradually become inadequate to meet the needs of regulation and industry development. Xie Zilong argues that the current Drug Administration Law lacks corresponding provisions for new situations, emerging issues, and novel practices. Specifically, there is a lack of legal basis for areas such as retail chain operations, third-party logistics, online drug sales, drug exports, excipient management, and drug recalls, leaving these areas as regulatory gaps within the Drug Administration Law.

In 2015, national and local food and drug regulatory authorities began to levy fees in accordance with the “Fee Standards for Drug and Medical Device Product Registration,” the “Detailed Rules for the Implementation of Fees for Medical Device Product Registration (Trial),” and local fee standards for product registration. Due to the wide variety of products offered by in vitro diagnostic (IVD) companies and the low sales volume of individual items, coupled with declining inspection fees at medical institutions, these enterprises face mounting survival pressures from the dual burden of registration fees and falling market prices. Zhao Yixin suggested that relevant departments, including the National Development and Reform Commission and the China Food and Drug Administration, should conduct research on fee structures for this sector and establish reasonable fee standards.

Domestic medical devices are subject to mandatory grouped tendering, with prices required to be at least 30% lower than those of imported brands of equivalent quality. The current process for listing and screening medical devices on online procurement platforms is relatively cumbersome. China has not yet established a comprehensive national trade protection framework related to intellectual property rights. In response to these multiple challenges, Zhao Yixin suggests that major hospitals in China establish standards of “equivalent quality, equivalent price” as the threshold for medical device procurement; streamline the process for listing and screening medical devices on online procurement platforms, granting immediate platform access to products (including innovative ones) that have obtained the corresponding registration certificates in compliance with regulations; improve the bidding and evaluation system to enhance hospital operational efficiency and meet the diverse healthcare needs of patients; and, specifically for the medical device industry, build a collaborative platform for intellectual property development and protection. This platform should conduct regular training on international and domestic patent applications, intellectual property protection, defense strategies, litigation, latest regulations, and case studies, while maintaining ongoing business communication with domestic medical device enterprises.

Under the national policy of “Mass Entrepreneurship and Innovation,” supportive policies for innovation in the medical device industry continue to emerge. However, these policies currently remain limited to the upstream sector. Due to variations in bidding systems across provinces and municipalities, with tenders often conducted only once every few years, innovative medical devices face significant challenges in entering the bidding process. This not only sharply increases operational costs for companies and raises the risk of startup failures, but also significantly elevates the allocated costs of medical devices. Zhao Yixin suggests that the National Health and Family Planning Commission should promptly formulate policies to support the clinical use of innovative products during the bidding and procurement stages, accelerate the inclusion of innovative medical devices in the bidding system, and facilitate their rapid adoption in clinical practice.

Lu Chunyun, a deputy to the National People's Congress (NPC), member of the Standing Committee of the Taizhou Municipal Party Committee, and Secretary of the Party Working Committee of the Pharmaceutical High-Tech Industrial Development Zone, submitted multiple proposals at this year’s Two Sessions. These proposals focused on the development of the pharmaceutical industry, covering issues such as tiered management of retail pharmacies, approval of drug technology transfers, conducting consistency evaluations for generic drugs, and including genetic testing in the reimbursement coverage for specialty oncology medications.

Lu Chunyun noted that the progress of generic drug consistency evaluation is being hindered by tight deadlines, the complexity of the evaluation process, a shortage of clinical trial sites, and substantial costs. He recommended introducing special policy measures to support generic drug consistency evaluations, thereby helping domestic companies overcome development bottlenecks. Furthermore, he urged the prompt release of a list of reference listed drugs required for consistency evaluations, as well as official guidelines for evaluating products with modified strengths or dosage forms, to provide clear direction for corporate compliance efforts.

Currently, targeted therapies are globally recognized as one of the most effective approaches for cancer treatment. However, they are not universally effective, making genetic testing essential prior to initiating targeted therapy. Lu Chunyun recommends strengthening the application of genetic testing in oncology, starting with the implementation of free genetic screening for women at risk of breast and cervical cancers. Secondly, she proposes including genetic testing for targeted therapy within the scope of reimbursement for specialized anticancer drugs under medical insurance. Thirdly, she suggests that the government conduct open tendering for third-party genetic testing laboratories to help control medical insurance expenditures.