Summary of Key Points
The 2025 regulatory annual report released by the National Medical Products Administration reveals that the domestic pharmaceutical industry is in a period of clear reshuffle and upgrading: on one hand, the approval speed for new drugs has significantly increased, with 76 innovative drugs approved throughout the year, an increase of nearly 60% compared to the previous year, significantly expanding the variety of legal medications available to the public; on the other hand, the number of pharmaceutical factories nationwide has stopped its four-year upward trend, with nearly 400 fewer factories, and nearly 30,000 offline pharmacies closing in a year. A large number of inefficient and non-compliant players are being eliminated from the market. At the same time, the overall rate of substandard drug samples has slightly increased, with traditional Chinese medicine (TCM) decoction pieces remaining a major area of quality issues. However, the effectiveness of regulatory efforts against counterfeit and substandard drugs has significantly improved, with the number of drug-related cases referred to the judiciary halving, resulting in a stronger foundation for overall drug safety.
---
Detailed and Easy-to-Understand Explanation
1. Paradox: More drug varieties, but fewer pharmaceutical factories?
Many might think that if drugs are selling well, pharmaceutical factories should be making more money. However, the reality is the opposite: there are now over 160,000 approved domestic drug products on the market, meaning the variety of legal medications available to consumers has increased by one-third compared to five years ago. The number of newly approved innovative drugs in 2025 reached a new high, yet the number of pharmaceutical factories in all sectors has decreased, with even the most profitable biopharmaceutical companies seeing a reduction of 25. This is not because companies no longer want to produce drugs, but because regulatory standards have become stricter. Small factories can no longer obtain new approvals; their existing approvals either expire or are sold to larger companies. On average, leading pharmaceutical companies now have nearly twice as many drug varieties as they did three years ago, with resources concentrating in more reliable large enterprises. This is actually good news for consumers: many cheaper, commonly used drugs used to be discontinued due to small factories' inability to make a profit. Now, large companies, with their extensive product ranges and higher production standards, are less likely to have substandard products.
2. Practical Impact: Why are so many pharmacies closing?
In 2025, 27,000 offline pharmacies nationwide closed, especially chain pharmacies. This is not because people are buying fewer drugs, but because the profit margins that pharmacies once had have disappeared:
- Online pharmaceutical shopping has become popular, with deliveries within half an hour; many people prefer this convenience over going to physical stores.
- Pharmacies that used to profit from selling non-medical items using medical insurance funds have seen such practices banned due to increased inspections. Additionally, outpatient co-ordination programs have made it cheaper to get prescribed drugs at community hospitals.
- Pharmacies are now required to have licensed pharmacists on duty 24/7, which is costly for small, less profitable stores that can't afford the expenses.
3. Drug Safety Concerns: Does a slight increase in the substandard rate mean worse drug quality?
The substandard rate of drugs increased from 0.57% to 0.77% in 2025, but there's no need to panic. The base number is very low (only about 7 out of 1,000 samples have issues), and most of these issues are minor, such as slight differences in pill weight or excess moisture in TCM decoction pieces. The increase could also be due to the larger number of new drugs on the market, many of which have not been tested extensively. The broader scope of inspections has exposed more issues. Vaccines and insulin, for example, have had zero substandard rates for years, while TCM decoction pieces have a higher rate of 2.68%, indicating that these are the main areas for future regulatory focus.
4. The Logic Behind the Data: Greater Efficiency in Regulation
The increase in the substandard rate might seem concerning, but the number of cases of counterfeit and substandard drugs found, as well as those referred to the judiciary, has decreased by nearly half. This indicates a shift from a broad-based regulatory approach to a more targeted one. Serious issues, such as using starch to make drugs or selling fake vaccines, have been largely eliminated. The focus is now on weaker areas, such as TCM decoction pieces and monitoring adverse reactions to new drugs, which helps to identify and address problems more effectively. This leads to a higher overall level of drug safety.