Abstract: In this article, the spillover effects of foreign direct investment (FDI) in Chinese pharmaceutical manufacturing industry has been studied which was based on property rights perspective. We collected the pharmaceutical manufacturing economical statistics in different provinces from 2001 to 2006. First of all, we established a dynamic panel model to measure spillover effects of FDI. Secondly the model was estimated by using the generalized method of moments (GMM) estimation, and the results were also checked. The result of empirical analysis shows that there are negative spillover effects of FDI within different forms of ownership pharmaceutical manufacturing enterprises. Technology gap in different ownership enterprises as well as the relationship between technology gap and foreign investment were also checked and found there were significant differences.