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Multinational companies in the life science sector are heavily influenced by government policies and regulations and in turn attempt to influence these actors nationally and internationally. This paper focuses on recent and on-going research, principally on the agro-biotechnology and, to a lesser extent, on the pharmaceutical industries, covering the evolution of policy and regulation in Europe, how policies are influenced by stakeholder pressures and how policy in turn influences company strategies for product development. We focus particularly on new ‘governance’ agendas in Europe and consider the relative impacts of enabling, constraining, discriminating and indiscriminate policies on company strategies as part of our development of an integrated approach to policy and governance. We also consider changes in external operating environments for multinational companies and compare past histories and present pressures on agro-biotechnology and pharmaceutical companies. The paper argues, with evidence, that a more enabling and discriminating policy and regulatory environment can achieve public goals more efficiently and effectively, taking account of impacts on innovation, than more blunt policy instruments. This type of environment takes into account the resources and capabilities available to firms and research laboratories rather than relying on broad brush carrot and stick approaches. [ABSTRACT FROM AUTHOR]