2016 marked the year when the pharmaceutical, medical, and healthcare industries underwent comprehensive deepening reforms and the implementation of the "13th Five-Year Plan for Medical Reform" began. Accelerating the process of medical reform has become a priority for the State Council, and significant changes are expected in the pharmaceutical industry:

 1. There are numerous policies and matters concerning drug quality standards, and in the future, China's drug quality standards will be elevated to a higher level;

 2. The regulation of the pharmaceutical industry continues to strengthen, and in 2016, more pharmaceutical companies will have their relevant certificates or qualifications revoked due to unannounced inspections conducted under GMP and GSP standards;

 3. The strengthening of the bidding system and the comprehensive promotion of second-price negotiation have led to a decline in the profit margin of pharmaceutical companies;

 4. The implementation of the new advertising law has hurt many enterprises that rely on traditional media, causing them to temporarily lose their basic business model;

 5. Policies such as drug proportion control, tiered diagnosis and treatment, and medical cost control will lead to a gradual decrease in the market share of drugs in medical institutions, and the off-premise sales of prescription drugs will gradually intensify;

 6. The practice of commercial bribery has not been fundamentally curbed, but it has become more covert, with many cases now disguised as academic promotion;

 In 2016, experimental policies will be introduced for the online sale of prescription drugs, but the competition in this market will immediately become intense.

 8. The business models of pharmaceutical and health product companies are undergoing a split. Companies that only sell products or only advertise are gradually shifting towards meeting consumer demands, providing consumers with more value-added services, and encouraging all employees to participate in the overall health industry. However, many are still operating in a fragmented manner, lacking a comprehensive understanding of the whole picture.

 9. The warning line for industry operational risks is rising, with many accounts receivable increasing, profits decreasing, and competition intensifying. Traditional business and marketing models are gradually losing their support points, and enterprises are being forced to accelerate their transformation efforts.

 10. The trend is shifting towards price reductions for drugs, equipment, and consumables through bidding mechanisms, while many drugs and household equipment in non-public medical institutions are experiencing price increases. The profit margins of many products included in the bidding catalog are gradually being squeezed. Especially once the Sanming model is implemented nationwide, it will cause significant turbulence in the pharmaceutical and medical industries.

 11. The registration of pharmaceuticals will be accelerated, and the "registration of fake new drugs" through modifying dosage forms, packaging, and specifications will be curbed;

 12. The cooperation between foreign and domestic pharmaceutical companies will expand rapidly. Chinese pharmaceutical companies that are adept at seizing opportunities will gain more development opportunities than those obtained through research and development of first generic drugs, and will build a stronger business structure through various platform cooperation models;

 13. Traditional Chinese medicine (TCM) and herbal medicine will gain tremendous development opportunities, and a large number of TCM pharmacies will emerge. Pharmaceutical companies focusing on TCM and herbal medicine will benefit greatly;

 14. The primary healthcare market will become a strategic battleground for Chinese pharmaceutical companies;

 15. The diversification process of pharmaceutical companies is accelerating, and more pharmaceutical companies will face the dilemma of diversification.

 16. The transformation of pharmaceutical companies has become a forced choice, but many pharmaceutical companies, unable to find a suitable path for transformation, either gradually decline, resort to desperate measures, or adopt a wait-and-see attitude. Consequently, many pharmaceutical companies experienced a significant decline in performance in 2016. However, those with a keen insight and foresight, who began their transformation years ago, are poised to reap a Dafengshou (Salad of assorted fresh vegetables) in 2016.