Song Ruilin: Domestic market key to China's drug innovation

by XIE Xin

The performance of Chinese innovative drugs, at home and abroad, is closely tied to the development of the domestic market, said Song Ruilin, chief expert at the China Pharmaceutical Innovation and Research Development Association (PhIRDA).

Speaking at the "Shanghai 2035: Answers for the Future" roundtable's biopharma session, Song said companies should remain rooted in China while expanding globally. Although the country has developed capabilities in R&D and business development, gaps remain in large-scale commercialization and industrialization. Without a stronger domestic market, it is difficult to build sustainable industry scale or mature commercial networks, he said.

Song added that a more diversified payment system is needed. While innovative drugs have been positioned as a strategic industry, the current structure — largely reliant on public hospitals and basic medical insurance — may not be sufficient to support long-term growth. Expanding commercial health insurance and developing an out-of-pocket drug market could help address this gap.

He said the debate over licensing early-stage assets overseas reflects these structural constraints. China recorded a rise in outbound licensing deals in recent years, but still lacks a large number of globally competitive blockbuster drugs or multinational pharmaceutical companies. Challenges such as duplicated R&D targets and barriers to hospital access remain.

At the same time, Song noted signs of change. Some companies are negotiating more complex deal structures, including higher upfront payments and revenue-sharing arrangements, suggesting a shift toward capturing greater long-term value.

For Shanghai, Song said its international orientation, clinical resources and industry base position it to play a larger role in global business development for innovative drugs, helping domestic companies connect with international markets and partners.

Editor's note: "Shanghai 2035: Answers for the Future" is a multimedia series produced by the Shanghai Municipal Government Information Office and Jiemian News. The project explores the city's long-term development across key sectors through documentaries, expert roundtables and interviews. The biopharma chapter examines how Shanghai is developing its drug innovation ecosystem, with a focus on clinical resources, commercialization pathways and global expansion.