This paper analyses industry-university interaction and its characteristics in the Brazilian pharmaceutical system of innovation, taking account of the relevance of company strategies, the approach of the universities and the actions of government. By analysing primary and secondary data the authors show that, for as long as corporate investment in R&D remains rare, and government efforts to stimulate these investments are inadequate, it will be difficult to increase levels of innovative activity in industry; and especially so in the pharmaceutical sector. The paper highlights the relevance of internal R&D structures for the generation of innovation and for interaction with the academic sector; the need to improve the physical infrastructure and modernize the internal organization of research institutions; the importance of appropriate and planned government action and the establishment of an environment conducive to innovation; and the key role played by government funding and support for players in the pharmaceutical system of innovation. (Contains 14 notes and 4 tables.)