Abstract
India, the world's fourth largest pharmaceutical manufacturer, did not have a product patent system until 2005. Without any product patent, Indian pharmaceutical companies reverse-engineered on-patent drugs, created "generic drugs" using a different process, and sold them in India as well as worldwide. However, due to the TRIPS agreement, India was forced to introduce a product patent system by 2005. Large pharmaceutical companies in India foreseeing an introduction of the patent system in the near future, changed their business models in the mid-1990s, poured more resources into their R&D and started new drug discovery. Previous studies have shown that the introduction of a product patent system in developing countries tend to hinder the development of the country's industry. However, large Indian pharmaceutical companies continue to show strong financial results. These positive results implicate that by changing their business models, Indian pharmaceutical companies have overcome the negative impact of the introduction of product patent.
