Abstract: Research on dynamic interaction effects among government subsidies, R&D investment and innovation performance, based on the panel data of different ownership pharmaceutical listed companies in China from 2008 to 2015 with PVAR model, using impulse response function and variance decomposition analysis methods. Results show that the government subsidies and R&D investment are lagging behind the 1-3 phase of mutual promotion, the performance of state-owned enterprises is more significant than that of non-state-owned enterprises. R&D investment and innovation performance are lagging behind the 1-3 phase of mutual promotion, the performance of non-state-owned enterprises is more significant than that of state-owned enterprises. Government subsidies will improve the innovation performance, but innovation performance will restrain the amount of government subsidies for the next 1-2 years. The performance of non-state-owned enterprises is more significant than that of state-owned enterprises. The findings could positively contribute to the decision making of government subsidy policy and the establishment and improvement of enterprise innovation research and development strategy.