Healthcare in China Update: VBP Drug List Expanded to Include Biologics — Key Takeaways

China’s Volume-Based Procurement (VBP, 带量采购, dàiliàng cǎigòu) program, which began in 2018 with small-molecule generics, expanded in its 10th national round (Q4 2024) to include 15 biologic drugs for the first time. Biologics now join the list of procured medicines, covering monoclonal antibodies, fusion proteins, and therapeutic proteins used in oncology, rheumatology, and endocrinology. This shift marks a pivotal moment for foreign pharmaceutical executives assessing China market access and pricing strategies.

Why This Matters

Foreign drugmakers have long relied on biologics as high-margin, differentiated products with patent protection and limited competition. The inclusion of biologics in VBP signals that China’s healthcare cost‑containment is extending beyond commoditized generics into innovative biologics. For multinational corporations (MNCs), this means that even blockbuster biologics—like adalimumab, bevacizumab, or insulin analogs—now face mandatory price cuts of 40%–80% to win procurement contracts. Failure to participate in VBP can result in loss of hospital access for up to 85% of urban public hospitals.

According to the National Healthcare Security Administration (NHSA, 国家医疗保障局, guójiā yīliáo bǎozhàng jú), biologics procurement will cover an estimated 35% of China’s total hospital drug spending by 2026, up from less than 5% in 2023. Foreign executives must now recalibrate market access strategies, supply chain planning, and R&D pipelines to account for VBP expansion. The decision to compete or exit specific therapy areas is no longer optional but a strategic imperative.

Key Changes in the 10th VBP Round

Below is a summary of the most significant changes and their implications for foreign pharma companies.

• 15 biologics included – Drugs such as rituximab, trastuzumab, etanercept, and insulin glargine are now procured nationally. Previous rounds only covered small molecules.
• Price reduction target: 50%–70% average price cut compared to pre‑VBP hospital tenders, with some biosimilars seeing cuts as deep as 85%.
• Guaranteed volume commitment: Each winning bidder receives a contracted share of the national demand, typically covering 60%–80% of the estimated annual usage.
• Biosimilar competition: For each biologic, 3–6 domestic biosimilars now compete head‑to‑head with originator products, eroding the innovator’s market share from over 90% to below 30% in some cases.
• Implementation timeline: Contracts begin in January 2025, with full rollout across all provinces and military hospitals by March 2025.

Price and Volume Impact: A Comparative View

The following table illustrates the effect of VBP on selected biologics in previous provincial pilot programs (2022–2024) and the projected national impact.

Source: NHSA public procurement data and industry reports; prices are approximate ex‑factory before rebates.

How the VBP Expansion Affects Foreign Executives’ Decision‑Making

1. Reassess product portfolio prioritization. For biologic assets still under patent or with limited biosimilar competition (e.g., novel biologics for rare diseases), consider early‐stage lobbying for exemption or phased VBP inclusion. For mature biologics, prepare for price cuts of 50%+ and adjust revenue forecasts.
2. Evaluate participation strategy. Two options exist: win a procurement contract at a low price but secure volume, or opt out and compete in the residual market (15%–25% of hospital volume) and out‑of‑hospital channels. The choice depends on brand loyalty, supply costs, and ability to shift to distribution outside the VBP system.
3. Invest in local biosimilar manufacturing or partnerships. Domestic biosimilar players with lower cost bases have a competitive advantage. MNCs can license out early‐stage biosimilars to Chinese partners or co‑develop to reduce manufacturing costs.
4. Strengthen market access and real‑world evidence. To justify premium pricing for innovative biologics outside VBP (e.g., combination therapies, new indications), companies must generate Chinese real‑world evidence demonstrating superior outcomes and cost‑effectiveness versus VBP alternatives.

Pitfalls of the Expanded VBP for Foreign Drugmakers

While the expansion creates volume opportunities, several risks must be managed carefully.

1. Margin Compression Beyond Sustainment

Biologics manufacturing costs are higher than small molecules, and price cuts of 70% often push MNCs below their break‐even point for imported products. One analysis by IQVIA found that 6 of the 15 biologics in the latest VBP round would generate negative margins if sourced from overseas factories. This necessitates local fill‑and‑finish facilities, contract manufacturing agreements, or joint ventures to lower cost of goods sold.

2. Volume Commitments May Not Materialize

VBP contracts guarantee volume at the national level, but hospitals often revert to prescribing off‑contract brands to patients willing to pay out‑of‑pocket. In a 2023 survey of 200 Chinese public hospitals, 42% reported that post‑VBP compliance fell short of contracted volumes for biologics in provincial pilots. Foreign companies must monitor hospital execution and have contingency inventory management plans.

3. Biosimilar Competition Accelerates Market Erosion

Domestic biosimilar developers such as Innovent, Henlius, and Qilu have filed dozens of applications for VBP inclusion. As of November 2024, the NHSA has approved 48 biosimilars for 15 reference biologics. Originator brands now face the risk of being delisted from hospital formularies if they do not win procurement contracts. Even when they win, the low price may not sustain the same level of sales force or research investment in China.

4. Regulatory and Reimbursement Uncertainty

The NHSA has signaled that future VBP rounds will include more complex biologics such as cell therapies (CAR‑T) and gene therapies. The inclusion of CAR‑T in VBP—potentially by 2026—would upend the current high‑price, limited‑volume model. Foreign executives need to scenario‑plan for these eventualities and engage early with health technology assessment (HTA) bodies in China.

Where to Go From Here

Based on our analysis of the VBP expansion to biologics, we recommend three distinct decision paths for foreign pharmaceutical executives evaluating their China business.

Each path requires a clear governance structure within your Asia leadership team. We recommend that foreign executives conduct a portfolio review using the following checklist:

• 1. Identify which biologics in your pipeline will face VBP in the next 2–3 rounds.
• 2. Calculate the minimum price at which you can operate profitably assuming local supply chain.
• 3. Assess the biosimilar landscape for each product (number of competitors, biosimilar approval status, manufacturing costs).
• 4. Determine whether your product qualifies for any VBP exemptions (orphan, pediatric, innovative).
• 5. Set up a dedicated “VBP response team” with members from market access, finance, supply chain, and regulatory affairs.

The expansion of VBP to include biologics is not a temporary policy cycle but a structural shift in China’s healthcare procurement. Foreign companies that proactively reshape their go‑to‑market models—by embracing local manufacturing, real‑world evidence, or targeted digital marketing—will be best positioned to defend and even grow their China business.