China has always been known as one of the leading country for manufacturing generic drugs, with the fastest growing pharmaceutical market in the world. 95 percent of the nation's 189,000 drugs registered are generics. However, the quality of the generic drugs manufactured in China is poor. The high repetitive ratio and over production have led to a limited profit margin for the pharmaceutical industry, which is less than 10% comparing with international average of 50%. Therefore, a reformation of the regulatory approval system for drugs was carried out in second half of 2015, with the efficacy reassessment of generic drugs being the main focus. The main target of the efficacy reassessment is all the oral solid varieties approved before 4th March 2016. 289 varieties of generic drugs are forced to undergo efficacy reassessment by 2018. Any drugs that failed in the reassessment will be eliminated from the market starting from 2019. This policy marked a remarkable transformation of the whole pharmaceutical industry. It would help improve quality but would also send ripples through the industry. With higher standards to meet, small companies are likely to be swept out of the market. The Increased market concentration rate would benefit the pharmaceutical industry in the long run.