Now, it turns out some leading Western pharmaceutical firms--including Merck, Eli Lilly, and Johnson & Johnson--have begun outsourcing some critical aspects of the pharmaceutical research and development process to pharmaceutical firms in India. This seemed impossible just a few years ago.
In the 1970s, India announced that it would not honor international pharmaceutical partents. This policy decision had at least two important implications for pharmaceutical industry in India. First, it led to founding of thousands of generic drug manufacturers there--firms that reverse engineered patented drugs produced by U.S. and Western European pharmaceutical companies and then sold them on world markets for a fraction of their original price. Second, virtually no pharmaceutical research and development took place in India.