Drug research involves scientific discovery, technological inventions and product development.  This multiple dimensional effort embodies both high risk and high reward and is considered one of the most complicated human activities.  Prior to the initiation of a program, an in-depth analysis of “what to do” and “how to do it” must be conducted.  On the macro level, market prospects, capital required, risk assessment, necessary human resources, etc. need to be evaluated critically.  For execution, drug candidates need to be optimized in multiple properties such as potency, selectivity, pharmacokinetics, safety, formulation, etc., all with the constraint of finite amount of time and resources, to maximize the probability of success in clinical development.  Drug discovery is enormously complicated, both in terms of technological innovation and organizing capital and other resources.  A deep understanding of the complexity of drug research and our competitive edge is critical for success.  Our unique government-enterprise-academia system represents a distinct advantage.  As a new player, we have not heavily invested in any particular discovery paradigm, which allows us to select the optimal approach with little organizational burden.  Virtue R&D model using CROs has gained momentum lately and China is a global leader in CRO market.  Essentially all technological support for drug discovery can be found in China, which greatly enables domestic R&D efforts.  The information technology revolution ensures the globalization of drug discovery knowledge, which has bridged much of the gap between China and the developed countries.  The blockbuster model and the target-centric drug discovery paradigm have overlooked the research in several important fields such as injectable drugs, orphan drugs, and following high quality therapeutic leads, etc.  Prejudice against covalent ligands, prodrugs, nondrug-like ligands can also be taken advantage of to find novel medicines.  This article will discuss the current challenges and future opportunities for drug innovation in China.