The fast-growing global pharmaceutical industry has played a pivotal role in health and economic development. Alongside the accumulation of R&Ds, the more affordable generic drug has aroused public attention for its tremendous potential benefits in social welfare. Generic products are of crucial importance in developing countries, but the qualities are concerning. China has the second-largest pharmaceutical industry worldwide and is a major manufacturer of generic drugs. Considering the expanding market size and the high potentials, policymakers in China must thoroughly understand the market features and the factors that affect pharmaceutical prices. This dissertation will provide an empirical analysis of the correlation between the price and the generic competition based on the historical bidding records in China. Using a quasi-hedonic pricing model estimated by a fixed-effect estimator, the paper presents evidence of a negative generic competition effect on pharmaceutical prices at a statistically significant level. Using a difference-in-difference approach in the context of the implementation of the 2016 Drug Consistency Evaluation in China, the study demonstrates that a stringent regulation on generic drug quality will strengthen the competition effect on pharmaceutical prices, mitigate the market distortions and reap the full benefits of competition.