CFDA strives to narrow a typical five to seven year lag between how long new drugs reach the market in China compared with Western countries.
Investors are betting on China's potential to feed the global pharmaceutical pipeline, putting a multi-billion-dollar price tag on a handful of stocks, even as the country struggles to close a huge R&D gap with the West.
Shares in firms such as Chi-Med, Beigene and Zai Lab have soared on international markets this year, fueled by hopes for their drugs and recent reforms to China's regulatory system that should speed up approvals.
"It's almost a coming out party for China biotech," said Christian Hogg, chief executive of Hutchison China MediTech or Chi-Med, which presented promising data at a global medical congress this week on a lung cancer drug it discovered in China and is developing with AstraZeneca.
"China is in vogue because of the positive moves on the regulatory side, as well as advances at companies. It's a big, big change versus 10 years ago and it is accelerating."
Importantly, national and provincial authorities are also moving faster to agree payments for innovative drugs, albeit after negotiating price discounts in many cases.
Yet amid the euphoria it is easy to lose sight of the fact that China still has far to go. It contributes just 4 percent of global drug innovation - as measured by the number of products in development and recent launches - against 50 percent from the United States, according to an October 2016 report from four Chinese pharmaceutical associations.
"It is very apparent they are trying to transition to being more of a novel drug development environment and bring in more innovative research," Scott Gottlieb, head of the U.S. Food and Drug Administration (FDA), told Reuters.
"I think it's going to be a long transition ... we built up an ecosystem in this country over decades and decades."
China's traditional strengths lie in generic drugs and the bulk production of active pharmaceutical ingredients that are found in pills in pharmacies worldwide.
The shift in focus to original research is a change in mindset, although it builds on the success of contract research and manufacturing company WuXi Biologics, which does much of the legwork for China's budding biotechs.
Reforming drugs watchdog
Bi Jingquan, the reformist bureaucrat who has led China's drugs watchdog the CFDA since 2015, views innovative - and affordable - drugs as the key to meeting the country's growing clinical demands.
China is now the world's second-biggest drugs market after the United States, with more cases of cancer and diabetes than any other nation, fueled by fast food, smoking and pollution.
But the CFDA head lamented in a recent speech that Chinese domestic drug industry R&D investment was only 42 billion yuan ($6.3 billion) last year, a small slice of the $157 billion spent worldwide by drug companies in 2016, according to market intelligence group EvaluatePharma.
Redressing the balance is a priority.
"We want to make our pharma industry big and strong, make our drug companies more competitive, so that we can shift our country's long-standing reliance on imported new drugs," said Bi Jingquan's deputy Wu Zhen.
A big part of that involves overhauling regulation, with a new system now in place to accelerate full and conditional drug approvals as the CFDA strives to narrow a typical five to seven year lag between how long new drugs reach the market in China compared with Western countries.
Plans announced last week mean the agency will now accept data from overseas clinical trials. That was applauded by Pfizer, the top foreign drugmaker in China, highlighting the stiff competition still facing local biotechs.
So far many of the new drugs discovered in China are follow-on medicines in established therapeutic classes rather than ground-breaking first-in-class treatments.
Some global companies like Swiss-based Novartis and Roche, with deeper institutional scientific knowledge, are also tapping into China's science base to discover their own promising new drugs in the country.
Still, Chinese firms are notching up their first home-grown successes, particularly in cancer, with Shenzhen Chipscreen Biosciences winning a CFDA green light for the first modern oncology drug, used to treat a rare lymph-node cancer, in 2015.
Now Chi-Med, working with Eli Lilly, hopes for approval of what would be a broad-use bowel cancer medicine, fruquintinib, around the end of this year.
On the international stage, Beigene and Chi-Med are also racing to be first to bring China-discovered cancer drugs to U.S. and European patients, often doing deals with global firms that can provide marketing expertise outside China.
In July, Beigene signed a deal worth up to $1.4 billion with Celgene, licensing a promising cancer immunotherapy drug candidate to the U.S. group in the largest ever transaction involving a Chinese medicine.
Beigene CEO John Oyler is convinced Chinese drug discovery is on a roll, backed by powerful interests in Beijing who want to forge a leading position in the sector, just as China has done in energy, finance and telecoms.
"The day you see a China-grown company that is one of the five major global pharmaceutical companies is approaching," he said, though he admitted recent big share price rises were "not commensurate with clinical data being reported".
Others pointed to an under-developed academic ecosystem in China and the fact most big local drugmakers were deeply rooted in generics, despite outward talk of innovation.
"It's easy to say I want to do new drug development, but then it's harder to see yourself spending $100 million and then fail," Samantha Du, chief executive of Zai Lab, told Reuters at the company's headquarters in Shanghai. Du was also a co-founder and chief scientific officer of Chi-Med until 2011.
Zai Lab, which listed on the Nasdaq stock exchange in September, has a drug discovery program focused on immuno-oncology, though for now its pipeline is dominated by molecules bought in from the likes of GlaxoSmithKline, Sanofi and Tesaro.
Du hopes to change that one day but says it won't happen overnight.
"It's such a long cycle, if you want to discover and develop drugs from ground zero, that's 12-15 years," she said. "It's going to take time."