The biotechnology-related market in Japan is expected to be worth as much as $100 billion by the year 2000. Rather than being an industry in and of itself, biotechnology will affect many economic sectors, and may soon become crucial for maintaining a competitive edge in those sectors. In the immediate term, biotechnology will affect industries such as pharmaceuticals, agriculture, and food processing; further on, and with far greater uncertainty, waste disposal, electronics, and materials. This report provides a preliminary analysis of Japan's industrial policies to promote biotechnology, one of the three technologies the Japanese government has identified as essential to Japan's future competitiveness. The government has introduced various mechanisms, both old-fashioned and experimental, to foster Japanese success in biotechnology. American firms and policy makers need to understand Japanese efforts in biotechnology, just as they have had to understand Japanese efforts in advanced electronics. An early start is well advised. Although Japan today may be second to the U.S. in biotechnology development, it is not a distant second. With both governmental long-term strategic policies and private firms' efforts to become more innovative, Japan may rapidly catch up to the U.S.