OBJECTIVES: To evaluate the short-term cost-effectiveness of Liraglutide versus Insulin Glargine in patients with type 2 diabetes (T2DM) using a composite endpoint from clinical trials and the incremental medical cost in a Chinese setting. METHODS: The cost-effectiveness analysis was calculated as the incremental cost per successfully treated patient of Liraglutide versus Insulin Glargine at week 26. Three cohorts of 100 patients each with Liraglutide 1.2mg, Liraglutide 1.8mg and Insulin Glargine were established for comparison. Effectiveness data of patients with T2DM achieving the composite endpoint of HbA1c<7.0%, no weight gain, and no hypoglycaemia at week 26 from a meta-analysis. Safety data including hypoglycaemia and serious adverse events were derived from ‘Liraglutide Effect and Action in Diabetes’ trials. Medical costs included the cost of drugs, needles, hypoglycaemia and serious adverse events. The prices of drugs and needles were accounted by Chinese market retail price. The costs of hypoglycaemia, serious adverse events and weight loss were obtained from published data. All costs were adjusted to 2012 Chinese value based on China Consumer Price Index. Results were calculated as the difference of total expenditures of Liraglutide versus Insulin Glargine divided by the difference of patients achieving target. One-way sensitivity analyses were performed. RESULTS: The total cohort cost was CNY 1,658,112 (Liraglutide 1.8mg), 1,101,812 (Liraglutide 1.2mg), and 881,326 (Insulin Glargine). Number of patients successfully achieving the composite endpoint was 40 (Liraglutide 1.8mg), 32 (Liraglutide 1.2mg), and 15 (Insulin Glargine).Thus incremental cost per successfully treated patient was CNY 12,970 and CNY 31,071 for Liraglutide 1.2mg and 1.8mg versus Insulin Glargine respectively. Sensitivity analyses of the safety parameters suggested results were robust. CONCLUSIONS: Liraglutide was a cost-effective treatment approach versus Insulin Glargine for treating T2DM in a Chinese setting. The incremental costs were less than CNY 37,784 of estimated China GDP per capita in 2012.