Background: Global healthcare innovation networks nowadays have expanded beyond developed countries with many developing countries joining the force and becoming important players. China, in particular, has seen a significant increase in the number of innovative firms and research organizations stepping up to the global network in recent years. Nevertheless, the intense Research and Development input has not brought about the expectable output. While China is ascending at a great speed to a leading position worldwide in terms of Research and Development investment, scientific publications and patents, the innovation capabilities in the pharmaceutical sector remain weak. Discussion: This study discusses the challenges and opportunities for pharmaceutical innovation in China. One hand, academic, industrial, institutional and financial constraints were found to be the major and inevitable barriers hindering the development of drug innovation. On the other hand, unique advantages had been observed which included growing pharmaceutical market, Research and Development funding, distinctive source, and international cooperation. Summary: The most important thing for China's pharmaceutical sector to leap forward is to break though innovation barriers and integrate own advantages into global value-chain of healthcare product development.