The pharmaceutical industry faces a great deal of challenges nowadays. In Taiwan, since health insurance took effect, it has dramatically influenced directly on the medical treatment and the development of the pharmaceutical companies. Global Budget System, introduced with the phased implementation in 1998, aimed to resolving the finance deficits resulted from the medical insurance. However, the existing issues are still prevailing, such as high patient visits, high clinical spending to total medical costs and high price gap between ex-factory price and patient price. In addition, more issues come up due to the tight price control and rigid new drug application under the governmental drug policies. Examples are hospitals’ replacing drugs with sole consideration of cost pressure and low ratio of new drug approval. The trend shows the difficulties to balance the financial control and improvement on civic health. In this research, we use the data analysis method to understand the effect of the governmental drug pricing policies on pharmaceutical industry and the strategies developed by the industry to cope with the challenges, including accelerating new product launch, seeking for merger/strategic collaboration and differentiating the target market. Then use the case study method to analyze the specific situations the case company faces and the business strategies developed by the case company to combat with the environmental changes. The case company set its strategic direction on focusing due to the limited resources. So it started with selecting the therapeutical areas, and then reallocating its resources to the certain targeted theareutical areas to gain the product synery. Then divested the off-patent products and sought for business partners to co-promote the promoted products in other territories that the case company can not reach. The case company pays off with higher-than-market sales growth. Forward looking, the suggestions are made to the case company, including externally to keep close collaboration with industries associations to gain further influence on development of government drug price policies; internally further to improve productivity, to accelerate new product launch and to strengthen the management of business partners. Only constant delivering excellent execution can keep its market advantage on the long run.