China’s government has initiated enterprise submissions for its 12th national Volume-Based Procurement (VBP) batch, signalling an intensive new phase in its campaign to restructure healthcare costs. Run by the National Healthcare Security Administration (NHSA), this June 2026 procurement round places an estimated RMB 60 billion (US$8.8 billion) market up for grab across 65 critical drug varieties, aggressively accelerating the mandatory substitution of off-patent originators with low-cost generics and biosimilars.
The latest expansion targets blockbuster treatments in highly contested therapeutic areas, including oncology, cardiovascular disease, and metabolic disorders. Prominent therapies facing steep price erosion from generics competition include Pfizer and Astellas’ advanced prostate cancer drug Xtandi (enzalutamide)—whose core patent expired on 29 March 2026, paving the way for generic substitution in this procurement round—and Novartis’s chronic heart failure medication Entresto (sacubitril/ valsartan), the latter generating annual Chinese sales of up to RMB 8 billion (US$1.2 billion).
This expansion builds directly on historical VBP rounds that systematically broke down complex biological markets. The milestone 6th national round targeted insulin products, forcing average price cuts of 48% across 42 product variants and eroding margins for global originators. Concurrently, regional and national expansions absorbed critical oncology biosimilars—including those for bevacizumab and rituximab—enabling low-cost domestic alternatives to rapidly capture up to 80% of public hospital volume via mandated displacement shifts.
Since its 2018 rollout, China's VBP framework has traded immense guaranteed public hospital market volumes for deep price slashes. While saving the medical system over US$60 billion, it has turned the domestic generic and biosimilar drug market into a low-margin desert.
However, data reveal the NHSA is shifting away from pure price destruction to protect supply chain stability. In the 11th VBP round, which concluded in late October 2025 with average price cuts of approximately 70%, authorities kept final winning bid prices strictly confidential for the first time to curb unsustainable price spiralling.
For this 2026 procurement window, a refined ‘anchor point rule’ strips market share from ultra-low bidders while capping the highest prices at 1.8 times the baseline anchor. Beijing has also elevated compliance requirements, mandating extensive GMP histories and 24 months of domestic sales track records between June 2021 and June 2026.
This tightening squeeze arrives alongside landmark pricing guidelines issued by the State Council, establishing a dual-track pharmaceutical economy. Under the directive, mature generics and biosimilars face unchecked market competition via VBP, while patented, first-in-class assets receive premium ‘value-based pricing’ protections. Driven by this domestic margin compression, Chinese firms are aggressively prioritizing cross-border innovation, fuelling a record outbound biotech licensing surge eclipsing US$135 billion.
As the 13 July 2026 enrolment deadline approaches, multinational giants and domestic generics firms are recalculating market exposure under a framework where volume is guaranteed, but premium margins are reserved for true innovation.
These measures align with the State Council's updated regulatory framework issued on 31 December 2025, which explicitly encourages R & D innovation to reinforce drug safety [1]. China has accordingly cemented its status as a global innovation hub; in 2024, 31% of major pharmaceutical companies' innovative pipeline assets originated via in-licensing from the country [2].
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References
1. GaBI Online - Generics and Biosimilars Initiative. China updates regulations to encourage research and innovation and improved drug safety [www.gabionline.net]. Mol, Belgium: Pro Pharma Communications International; [cited 2026 Jul 3]. Available from: www.gabionline.net/policies-legislation/china-updates-regulations-to-encourage-research-and-innovation-and-improved-drug-safety
2. GaBI Online - Generics and Biosimilars Initiative. More China licence deals for US drug companies [www.gabionline.net]. Mol, Belgium: Pro Pharma Communications International; [cited 2026 Jul 3]. Available from: www.gabionline.net/reports/more-china-licence-deals-for-us-drug-companies
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