This research focuses on reviewing historic policy tools adopted by our government such as implementing GMP (good manufacturing practice), executing health insurance policy, instituting insured pharmacy price standard, selecting pharmaceutical industry as top ten tomorrow-star industries, encouraging dosage pharmaceutical companies making bulk pharmaceuticals, and so forth. The research results can be summarized as followings: 1. It was a pity for our government unable to effectively take the permission authority of foreign pharmaceutical plants applying their investment at Taiwan to facilitate those foreign companies transferring their techniques to local companies and to upgrade the technique standard of Taiwan domestic pharmaceutical companies. 2. It was unsuitable for our government to over-protect domestic bulk pharmaceutical industry, meanwhile, domestic bulk pharmaceutical companies were not so smart to take various challenges and miss their global competition capability. 3. The government executed GMP to restructure in both domestic pharmaceutical plant's hardware and software production facility that obviously decreases the manufacturing technique gap between domestic and international pharmaceutical companies. But the gap now still exist R&D and international marketing capability. 4. After the products patent rights of pharmaceuticals were quarantined in Taiwan, domestic pharmaceutical companies in Taiwan emphasize new medicine R&D. There are four suggestions proposed to our government in this study: 1. It will be necessary to use the "mechanism of medicine price standard" to help local pharmaceutical companies upgrade their technology. Meanwhile, all public hospitals and health care institutions should take it as first priority to use medicine made by local company. 2. The local pharmaceutical companies should take R&D and international marketing as future strategy and developed it by global cooperation and alliance. 3. The industry policy should have "backward integration" to develop bulk pharmaceuticals and intermediate products. 4. In order to reach the economy of scale, Taiwan pharmaceutical companies should proceed M&A to decrease the No. of total plants from 200 to less that 50.