Chugai Pharmaceutical Co. Ltd.'s international strategy plays against the backdrop of the history of the national industry and of profound changes in Japanese health care, an understanding of which has to go beyond the conventional Western wisdom that Japanese drug prices drop every two years.

As Chugai President Osamu Nagayama describes the pharmaceutical industry in Japan, it's a business that was born relatively recently, with truly serious R&D dating only from the 1960s. Previously, the market was dominated by over-the-counter products.