Japan has only rudimentary pharmaceutical distribution capabilities overseas where competition is also intense. Thus, the outlook for the current core of the national Japanese pharmaceutical industry is bleak. There is no clear evidence that a detailed, national master strategy has been developed to restructure Japan's pharmaceutical industry. However, the government is offering an attractive pharmaceutical investment package and is expected to encourage the formation of a limited number of distinct pharmaceutical groups, probably including 1large non-pharmaceutical Japanese firms and some foreign pharmaceutical multinationals. Such an approach would he based on pro-competition measures, private enterprise and entrepreneurial skills, and limited financial support direct from the national treasury. Thus, in the pharmaceutical sphere, Japan faces great challenges in the 1980s and beyond. How the country and individual corporations will deal with these challenges deserves close monitoring by everyone connected with the global pharmaceutical sector and enterprise. Some companies, Japanese as well as foreign, will prosper. But it will take time.