OBJECTIVE： To provide basic industrial research and development recommendations for the supply-side structural reform in drug distribution in China. METHODS： Structure-conduct-performance （SCP） analysis paradigm from Harvard was used for in-depth study of market structure， business conduct and business performance in China since 2010. RESULTS： Since 2010， drug distribution industry in China had shown the scale of decline in the growth rate， low market concentration， increased barriers to entry， the leading of state-owned capital， etc. Though corporate mergers and acquisitions and public financing expanded the scale， management information， third-party logistics， “Internet+”and pharmacy alliance business model flourished， the industry operating performance was poor， state-owned enterprises showed poor performance. CONCLUSIONS： The transformation and upgrading of the industry business model should be promoted by targetedly accelerating the supply-side structural reforms in the drug distribution industry， encouraging corporate finance mergers， breaking local protectionism， developing cooperative pharmacies and pharmaceutical third-party logistics alliances and leveraging the Internet.