Why China’s 4 + 7 policy is good news for innovative drug developers

China’s generics policy could free up $40B for innovative drugs over five years

China’s new policy on generic drugs is likely to have knock-on benefits for drug developers aiming to bring innovative compounds to the China market.

For multinationals, it will come after some pain, as they’ll see revenues drop from a scheme designed to drop generic prices -- including off-patent originator products -- by around 50%.

Long term, though, pharmas will gain from freed up financial and regulatory resources, and incentives to shift their product portfolios more heavily toward innovative assets.

The new generics pricing policy will also lead to greater consolidation of the generics sector, which could lower the oversight burden for China's drugs regulator NMPA, and increase industry compliance with quality standards.

China launched its “4+7 policy” as a pilot program late last year to centralize procurement of generic drugs, naming it for the

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