Abstract
BACKGROUND: The Market Authorization Holder (MAH) system in China, which separates marketing authorisation from production authorisation, was piloted in 2016 across 10 provinces and cities and was fully implemented at the end of 2019 with the new revision of the 'Drug Administration Law of the People's Republic of China'. This study examines the impact of the MAH system on innovation in China's pharmaceutical industry. METHODS: Using data from A-share pharmaceutical enterprises between 2009 and 2023, this study employs a Propensity Score Matching Difference-in-Difference (PSM-DID) design. The sample includes 134 Chinese listed enterprises, with 73 in the treatment group and 61 in the control group. RESULTS: The PSM-DID model, based on 1,310 observations, yields a significant DID coefficient of 0.5394. Enterprise size negatively correlates with R&D investment (-0.640), while Tobin's Q (0.153) and Top10 (0.0104) positively correlate with R&D. The MAH policy significantly reduces financing constraints (-3.556), and management incentives positively moderate the impact of the MAH system (0.0121). CONCLUSION: The findings suggest that the MAH system significantly enhances pharmaceutical innovation. Management incentives strengthen this effect, while financing constraints serve as an intermediary. The MAH system effectively stimulates innovation in the pharmaceutical industry, with management incentives playing a critical moderating role.