Kicking the Habit

The 11th national drug procurement round in 2025, the most recent, made clear it was based on "preventing involution and bid rigging." It was the first time measures were taken to address this race to the bottom in medical procurement, and was intended to provide a benchmark for rule optimization for the drug industry and the wider pharmaceutical sector.

Eager to seize market share, some enterprises quoted prices far below reasonable cost levels, ignoring basic drug quality control, production safety and sustainable operation.　

This hyper competition not only reduces profits but also risks drug quality and supply. Some enterprises halted production or failed to deliver after winning bids due to unsustainable low prices, disrupting the stable supply of clinical drugs and threatening patient safety. At first, the public appreciated lower drug prices, but lately, complaints from patients and doctors over the quality of generic drugs had risen.　

On October 27, 2025, a tense calm hung over the bidding hall in Qingpu District, Shanghai, where the 11th round of central drug procurement was held from 10:30 am until midnight. Wang Ming, a veteran pharmaceutical industry insider who has witnessed every procurement round since it started in 2018, said he sensed a palpable difference this time.　

"The competition was much fiercer than the 10th round [in December 2024]," he told NewsChina. A total of 445 enterprises submitted bids for 794 products, with 272 enterprises and 453 products tentatively shortlisted. For some drug categories, 30 to 40 enterprises vied for limited spots, testament to the intense rivalry in the generic drug market. Yet unlike previous rounds, there were no extremely low bids, such as the infamous "three cents for an aspirin" that happened during the 10th round, Wang said.　

This shift toward sensible bidding is the core goal of the 11th drug procurement round. Its most transformative change comes in the bidding and anchor price mechanism, abandoning the long-standing "lowest bid wins" principle.　

In previous rounds, there was a 1.8 times "circuit breaker" rule: the lowest valid bid overall set the anchor price, and any bid more than 1.8 times could disqualify the bidder. This allowed individual enterprises to set an artificially low anchor, dragging competitors into a race to the bottom.　

For the 11th round, the anchor price is the higher of two prices: either 50 percent of the average "comparable unit price" of all valid shortlisted bids for the same category, or the lowest bid.　

The "comparable unit price" is a specialized bidding term that standardizes pricing across different drug specifications by converting all prices to the smallest dosage unit, with bidders ranked by this unified price for shortlisting.　

Jiang Bin, deputy director of the Center for Public Policy Research at Peking University and a member of the NHSA's expert panel on pharmaceutical pricing and procurement, told NewsChina in an interview in late 2025: "The anchor price is the most important factor - it determines the maximum acceptable price for each drug category."　

By shifting the anchor from an individual enterprise's bid to 50 percent of the group's average, the bidding logic has moved from relying on a single player to reflecting industry consensus, a change Jiang described as a "highly targeted rule optimization" to curb irrational bidding. The impact of this reform is visible.　

The National Healthcare Security Administration commissioned experts to simulate bidding for over 200 drug categories from the seventh to the 10th bidding rounds using the new anchor price rule, finding that for about a quarter of the categories, the anchor price rose by an average of 34 percent and as high as 170 percent, compared with the original lowest bid. This adjustment has narrowed the average price gap among shortlisted products and eliminated extreme low bids.

In December 2025, the National Medical Products Administration refused marketing applications for more than 100 generic drugs. Cai Xuliu, founder of 3Audit, a third-party auditor of medical services and production, told NewsChina that this was the strongest supervision action for a decade and showed that the efforts on curbing vicious competition have begun to expand to the source.　

The NHSA has already launched a pilot program for the real-world comprehensive medical insurance value evaluation of drugs in 11 cities and provinces including Beijing and Hainan. The program collects and analyzes real-world drug usage data to conduct a comprehensive evaluation of clinical effectiveness, safety and cost-effectiveness, providing a scientific basis for healthcare insurance decision-making and laying the groundwork for a more robust post-market supervision system.　

According to the China Generic Drug Development Report 2025 released by the China National Pharmaceutical Industry Information Center in November 2025, the number of approved chemical generic drugs had reached 2,998, up from 914 in 2020, but the total sales volume of all approved chemical generic drugs in China during the period declined. As a large number of enterprises pour into the same generic drug types, vicious price competition is triggered, causing even more sluggish growth or even a decline in total sales revenue. In 2024, 203 generic drugs had at least five producers for each, compared with 79 in 2021. It resulted in "homogeneous competition," the report said.　

Jiang Bin said that because regulatory reforms on drug approvals take time, there will be intensive competition in the process for centralized bulk-buying in the short term. But the competition is expected to focus on quality, not prices.　

"These measures can force us to conduct precise calculations based on costs, production capacity and reasonable profits, to allow price quotes that can both secure the bid and ensure the sustainable development of the enterprise. This has effectively driven competition back to the track of cost control, quality management and technological innovation, marking an important step toward maturity for the entire generic drug industry," Liu Feng, deputy general manager of Yichang Humanwell Pharmaceutical, told NewsChina.　

The past decade also saw fast development of novel drugs in China. But in recent years, experts have been concerned that research and development have been focused on the top 10 drug targets that already proved effective globally. Given this, drug authorities have issued several documents stressing the importance of meeting the demand of actual clinical need in novel drug development, and of raising the standards of clinical trials of novel drugs to restrict unfair competition and encourage real innovation in the sector.　

In late January, China released the first Revised Regulations for the Implementation of the Drug Administration Law, highlighting IP protection and drug production supervision.　

"I hope the national policy will guide the novel drug sector to move to a high-quality development stage by raising the threshold to reduce homogeneous competition," Sun Piaoyang, a National People's Congress (NPC) delegate and chairman of Jiangsu Hengrui Pharmaceuticals, told the media on March 7 during the annual session of the NPC.