The impact of the 2019 revision of China’s drug administration law on the innovative output of pharmaceutical and biotechnology enterprises—a quasi-natural experimental study using sharp regression discontinuity design

Introduction The “Drug Administration Law of the People’s Republic of China” has a profound impact on the innovation of pharmaceutical companies. Methods This study analyzes Chinese pharmaceutical and biotechnology companies from 2014 to 2023 and employs a sharp regression discontinuity design (RDD) based on the 2019 revision of the Drug Administration Law to examine changes in innovation output before and after the policy, while exploring impact mechanisms from external conditions (financing constraints) and internal factors (human capital structure), with further heterogeneity analysis by firm size, region, and ownership. Results The results show that the implementation of the 2019 revised Drug Administration Law significantly increased the number of patent applications by pharmaceutical and biotechnology enterprises, thereby promoting innovation output. Further analysis finds that the policy promotes corporate innovation through two pathways: easing financing constraints and facilitating adjustments in human capital structure. Discussion This study provides empirical evidence on the effectiveness of the policy, offering insights for future legislation and suggesting pathways to enhance innovation capacity in the context of ongoing healthcare reform in China.