The impact of the Drug Marketing Authorization Holder system on sustainable improvement of innovation quality in the pharmaceutical manufacturing industry in China—An empirical study using synthetic control methods

Background: In November 2015, China launched a pilot program for its Drug Marketing Authorization Holder (MAH) system, aiming to integrate production and research and development resources to spur drug innovation. While many scholars have examined the theoretical relationship between the MAH system and pharmaceutical manufacturing innovation, empirical studies have been scarce. Methods: This study uses inter-provincial panel data on China’s pharmaceutical manufacturing industry from 2009 to 2019, along with synthetic control methods, to offer a robust analysis of the impact of the MAH paradigm on innovation quality in pilot provinces. We treat the 2015 MAH system implementation in ten provinces as a natural experiment and account for the mediating effects of R&D investments, allowing us to discern the underlying mechanisms. Results: Our findings demonstrate a significant positive effect of China’s MAH system on innovation quality in the pharmaceutical manufacturing industry. Specifically, the system is most effective in Jiangsu, Guangdong, and Shandong provinces. We also identify R&D investments as playing a mediating role in facilitating the favorable impact of the MAH system on innovation quality. Conclusion: Our study highlights the crucial importance of the MAH system in promoting innovation quality in China’s pharmaceutical manufacturing industry, providing vital empirical support for its adoption and further enhancement. This research also offers practical insights for policymakers and R&D decision-makers in the pharmaceutical sector.