Research & Development (R&D) plays an increasingly important role in China’s pharmaceutical industry. To gain a competitive edge in the global pharmaceutical market, the current national strategy of China forcefully pushes for independent drug innovations. This article investigates the historical, legal, and institutional contexts in which China’s drug R&D has evolved. Based on an analysis of the drug R&D evolution and national policies in China, it predicts the future trend of China’s policies relevant to drug innovations. This paper helps to understand the impact of national policies on drug R&D in China, which can be used to inform decision-making on investments in China’s pharmaceutical market or conducting technology trade and international cooperation with Chinese partners.