Abstract
This study investigates the Japanese pharmaceutical industry with focusing on a relationship among history, public policies, and firms. It portrays the historical development of the industry after the World War II. It compares the Japanese pharmaceutical industry with those of other developed countries. After ten-year long flattened sales, Japanese pharmaceutical industry is facing with difficulties to deal with the change of market conditions, technology, and regulations. This is caused by the delay of more research oriented public policies in the early 1980s. The current technology policy will have only a limited impact and M&A would not significantly revive the industry. I emphasize that the Japanese pharmaceutical industry requires the increase of demand for pharmaceuticals in value terms. The current price control should be reformed to allow price increase for innovative products. Japanese citizens should decide to what extent they could pay for pharmaceuticals and other medical services.
