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This article analyses the impact of the implementation of the 'Agreement on Trade-Related Aspects of Intellectual Property Rights' (TRIPS) on various segments of the Indian pharmaceutical industry. In particular, it focuses on the conditions under which a strong patent system can create benefits for a developing country's pharmaceutical industry. The theoretical analysis suggests that the greater the technological capabilities of the Indian pharmaceutical industry the greater are its chances to benefit from the introduction of stronger intellectual property rights (IPRs). The evidence presented paints a generally positive picture of the state of the Indian pharmaceutical industry, with the existence of strong and growing technological competencies that can be used as a platform for further expansion. These conclusions are dependent on India's worldwide success in the industry and cannot be automatically applied to other developing countries, especially if their pharmaceutical industry is not strong at the moment of the transition to a stronger IPR regime. [ABSTRACT FROM AUTHOR]