The past few years have witnessed a perfect regulatory storm in China’s pharmaceutical sector as the government seeks to implement its dual aims of shifting market demand from highly-priced branded generics to their lower-cost generic alternatives, as well as improving the availability and affordability of essential patented drugs to Chinese patients. The QCE is a mandatory bioequivalence test required by CFDA for the commercialisation of any generic drug in China. It is carried out primarily by requiring a registered generic drug to pass a test to assess its bioequivalence to a qualified reference drug. The National Drug Reimbursement list (NDL) is the second key initiative which has been used to exert downward pricing pressure on drug companies. Volume-based tendering counts as the third important price initiative of the central government has been the increasingly effective use of volume based public tenders, or “group purchasing” by a collection of local healthcare authorities and hospitals. This continuing evolution of the healthcare system means that drug companies must adapt as new stakeholders emerge. This is the challenge, as well as the opportunity, that faces innovative drug companies operating in China.