In 2023, the pharmaceutical industry shifted its underlying logic amid sorrow and hardship.

　　Over the past three years of the pandemic, we have witnessed a classic double whammy of both a black swan event and a gray rhino. Even before this, the pharmaceutical industry was undergoing structural adjustments driven by healthcare reform, ushering in profound changes: R&D‑centric strategies, registration reforms, pricing mechanisms, and payment models are all upending the industry’s traditional operating dynamics—this is the gray rhino.
 
　　The emergence of the gray rhino is inevitable; this is a gradual reform process. Regardless of whether certain stages proceed more quickly or more slowly, the overall trajectory of future developments can generally be anticipated.
 
　　Everyone can see the gray rhino; after seeing it often enough, most people come to understand its implications. Yet no one could have predicted the emergence of the black swan—COVID‑19—which has raged for three years and shows no sign of abating, reshaping economies, societies, and even the international political landscape. Naturally, the pharmaceutical and healthcare sectors, at the eye of the storm, have been far from unaffected.
 
　　Three years later, as pandemic restrictions were gradually lifted—first with the Twenty Measures and then with the New Ten Measures—the industry was once again thrown into turmoil by the end of 2022, all within the span of a single month.
 
　　From the initial wave of “having COVID” to the collective sense of hardship, it all unfolded in just a few short days. Amidst widespread talk of “celebrating positive cases,” antigen tests, ibuprofen, oxygen concentrators, pulse oximeters, Paxlovid, smectite powder, and human immunoglobulin—drugs and medical supplies once largely unknown to the general public—were frantically snapped up and stockpiled.
 
　　Witnessing this scene, as a veteran of the pharmaceutical industry, I’m torn between sorrow and anguish. Yet even amid my grief, I must still look ahead and ponder the future—specifically, the next phase of how the industry will operate.
 
　　1. Top-down driving forces are becoming increasingly evident.
 
　　Top-level design plays a pivotal, even decisive, role. Whether it is the approach to epidemic prevention and control, the strategy for lifting restrictions, or the mechanisms for ensuring the supply of various materials, all are shaped from the top down.
 
　　On the surface, businesses are responding to sudden surges in market demand; in reality, they operate within a policy‑driven environment. This policy‑centric landscape remains uncertain—its “slope” may be long, its “snow” thick—but in a remarkably short span, it has reshaped industry dynamics, mindsets, evaluation frameworks, and methodological approaches across policy, society, the market, and public discourse, thereby shaping the trajectory of the sector going forward.
 
　　Looking at December’s policies, the drug regulatory authorities swiftly approved multiple antigen‑testing products, a range of cold medicines received new registrations for COVID‑19–specific treatment, and Merck’s COVID‑19 drug was granted emergency market authorization. Meanwhile, provinces have listed various anti‑epidemic products on their procurement platforms, even adopting ad hoc measures—temporarily suspending the established policy that halts purchasing of unapproved products once three or more manufacturers’ products have been evaluated—and temporarily adding certain cold medicines to the national medical insurance catalog.
 
　　With the national price negotiations postponed and no news yet on centralized procurement, the essential medicines list has been unable to keep pace with the pandemic in formulating and refining its regulatory framework. Perhaps only once the situation has stabilized and we have had time to reflect on the past will it be possible to effectively integrate resources and meet the people’s aspirations for health and a better life in this new context.
 
　　2. The industry is still undergoing structural adjustments, only the direction has shifted.
 
　　Since top-down impetus plays a crucial role, has structural adjustment changed? The answer is no—it has not; only the direction has shifted.
 
　　Since 2015, reforms to the review and approval system for innovative drugs and medical devices have provided a powerful impetus to the industry. As a result, innovative pharmaceuticals have attracted strong interest from both investors and policymakers, while a combination of returning Chinese scientists, senior executives from multinational corporations, and diverse financing channels has fueled a surge in start-up biotech companies. Consequently, the pace of new drug approvals has accelerated, the number of approved products has grown, and fundraising and IPO activity have flourished.
 
　　On the generic‑drug front, consistency evaluations are gradually weeding out outdated production capacity, while centralized procurement is reshaping pricing and sales dynamics. Coupled with robust support for traditional Chinese medicine, innovative drugs, generics, and proprietary Chinese medicines are all benefiting in distinct ways—reflecting a structural adjustment driven by survival of the fittest, quality‑and‑efficiency enhancement, and targeted policy support for distinctive strengths.
 
　　Today, structural adjustments have not changed in direction—only in focus. Over the past two years, companies in the innovative‑drug space that were ready to go public have all basked in the spotlight of the capital markets, while those unable to raise funds have found themselves increasingly mired in difficulty. Why? Because the market winds have shifted, and with them, the trajectory has changed.
 
　　After granting innovative pharmaceutical companies several years of startup support, with all the promised incentives in place, one would expect no clinical hurdles and no difficulty raising capital. Yet, as these firms continue to fail to deliver truly groundbreaking drugs and remain unprofitable, investors’ patience has worn thin, and the policy‑driven tailwinds have faded. In this context, doesn’t the “three‑horse carriage” model now look more like a makeshift operation?
 
　　Even more alarming, the pandemic is the most significant macroenvironmental factor, capable of shifting the entire landscape.
 
　　A month ago, who would have given a second thought to those run-of-the-mill generic drugs that epitomized “outdated production capacity”? Aside from the fact that “ibuprofen” is easier to write and remember than “acetaminophen,” who even knew its pharmacological mechanisms or therapeutic effects? As for what an antigen POCT test is, it hardly mattered—consumers weren’t paying attention to such details; whatever they feared, they rushed to snap up and stockpile.
 
　　Sadly, the chaos of just one month of nationwide mobilization has served as the best possible market education: the more basic the drug, the more precious it is. Now, who even remembers those small‑molecule targeted therapies, monoclonal antibodies, or ADCs used to treat malignant tumors? Many people had already forgotten about semaglutide—once a blockbuster weight‑loss drug that sold out in less than two months.
 
　　The prevention and treatment of malignant tumors and cardiovascular diseases are, in essence, marginal demands that arise only when the environment is relatively stable and people aspire to a better life. Yet when these marginal needs are scaled back to their most basic forms, it becomes clear that what the public truly cares about is fundamental security—this, regrettably, is the stark reality.
 
　　3. The underlying fundamentals—some companies are thriving while others are struggling—remain unchanged; what has shifted is that the so‑called “joy” may not be genuine, and those in distress still haven’t figured out how to respond.
 
　　In the past, generic drugs were so abundant that companies often kept their approval documents stored in filing cabinets—often forgetting about them altogether. Now, they’re scrambling to resume production, running their lines around the clock. Faced with a surge in demand, many firms are now generating in a single month revenues and profits that previously took several months—or even half a year—to achieve.
 
　　In a daze, pharmaceutical sales representatives may not have experienced such widespread recognition in their entire careers as they have over the past month—and they’ve never found sales this easy. Didn’t we used to hear that the centralized procurement policy was diminishing the role of sales? Didn’t the industry once claim it no longer needed so many salespeople? It seems the tide has finally turned in favor of pharmaceutical sales.
 
　　However, not every pharmaceutical company is like this—not every firm offers cold remedies, and not every one stocks antigen tests or oxygen concentrators. So what about innovative‑drug companies? When pharma reps visit department heads and physicians every day, what can they possibly discuss? “Do you have ibuprofen? Do you have antigen tests?” If not, it’s best to stay away. The winds of change are shifting fast: in the past thirty years, fortunes have swung from east to west—and now, in less than thirty days, they’ve already turned back to the west.
 
　　However, even manufacturers of scarce products don’t enjoy this kind of demand every day. Antigen tests have only about a month left in the market; now that prices have dropped to 2 yuan, they’re practically begging buyers to take them off their hands. The good times for ibuprofen and similar drugs are also coming to an end—after all, the production capacity of a single pharmaceutical company in Shandong can already meet half of China’s market demand. As for smectite powder, it sold out in less than two days, and some people were already claiming it was all just a scam orchestrated by the printer operator...
 
　　But whether it’s the feverishly snapped‑up ibuprofen or the montmorillonite powder that set off a butterfly effect, what will be the next product to spark a buying frenzy? And how long will this last? Manufacturers who’ve already reaped the benefits can’t say for sure, while those without these products are left watching helplessly.
 
　　Times are indeed tough: some rejoice, while others grieve. Those who are celebrating have merely, in this peculiar period of distorted demand, felt unprecedented attention and seen long‑awaited profits turn positive; meanwhile, those who worry are pondering how their companies will move forward—and which projects or products might yet offer a glimmer of hope for survival.
 
　　4. The market urgently needs to restore order and confidence.
 
　　It is regrettable that fever clinics are overwhelmed and medical resources are stretched to their limits, and it is irrational for the public to rush to hoard medications. Even more abnormal is the phenomenon of “outdated production capacity” becoming mainstream. Society needs stability, and the market needs order; only then can the economy get back on track, and enterprises truly become the driving force behind innovation and civilizational progress.
 
　　Beyond COVID‑19, numerous diseases urgently require the concerted efforts of scientists, medical experts, businesses, governments, and society at large. Many serious and rare conditions, as well as the vast population of chronic disease patients, necessitate comprehensive social and health‑insurance coverage and access to quality medical care. Society must regain its rationality, and enterprises should fulfill their rightful role and contribute meaningfully.
 
　　Moreover, during extraordinary times, all sorts of opinions and rumors abound. We urge pharmaceutical companies and professionals not to blindly follow the latest trends or join in the hype. Prolonged dissemination of chaotic information online can inflict severe harm on society—information anxiety becomes the norm, trust in experts erodes, science is disbelieved, and all manner of human frailties and short-sightedness come to the fore. Regardless, we must remain true to our duties as healthcare professionals and, at the very least, avoid getting trapped in a vortex of misinformation and sensationalism.
 
　　5. Next, companies need to consider how to operate in the post‑pandemic era.
 
　　First, when will the pandemic end? That’s the key question. Much of the available data suggests that peak cases in various regions occurred around the time of the Spring Festival. In the long run, conditions will undoubtedly improve gradually, but I’m not so optimistic about the exact timeline. Back in early 2020, who could have imagined that the pandemic would still be ongoing three years later? Even if we assume another year lies ahead, are businesses adequately prepared? And do individuals have sufficient reserves—both financial and mental—to endure yet another year? Although these are hypothetical scenarios and projections under extreme conditions, it remains essential to make the necessary preparations.
 
　　Secondly, how can enterprises survive? Perhaps the first step is to examine how your customers are staying afloat. Public medical institutions have played a crucial stabilizing role in the face of the pandemic, and healthcare workers have made tremendous contributions; however, their future development cannot be resolved simply by issuing a few policy documents. The path forward for public medical institutions appears to be the same as that for most pharmaceutical companies—this calls for close alignment to ensure consistency in direction and underlying principles.
 
　　Moreover, beyond the healthcare‑institution market, what other markets can companies rely on to sustain themselves? Should they pioneer an entirely new domain, or simply follow the herd by vying for share in the out‑of‑hospital, online, and primary‑care segments? In fact, whether it’s the out‑of‑hospital, online, or primary‑care channels, these are, strictly speaking, endpoints rather than markets. The real market is one that demands products and services to deliver value—not merely to fill shelf space or shift inventory. How many companies truly prioritize this fundamental principle?
 
　　At the very least, you should consider your target customers: whether you’re serving government entities, businesses, or consumers. Different audiences have distinct needs, which translate into varying product or service offerings, delivery models, pricing strategies, and payment methods. But regardless of whether your focus is on government, business, or consumer markets, the cornerstone of your sustainability is consistently delivering value to your customers.
 
　　Finally, we must ask: Is the pharmaceutical sector a public good provided by the state, or is it truly a “market”? This is the ultimate question that every company must grapple with, as it determines whether—and to what extent—firms can generate profits.
 
　　If it’s a welfare arrangement, then the enterprise is merely a supplier—doing as it’s told and living off orders; naturally, such orders yield meager profits. If, on the other hand, it’s a genuine market, then the firm’s ability to innovate in products and services determines its pricing power and the commercial returns that accompany that innovation.