India has built a large pharmaceutical industry through an array of measures in support of domestic firms. The absence of product patents enabled Indian companies to become world leading producers of generic versions of patented drugs. Low costs and a strong engineering tradition continue to sustain competitive strength. The implementation of the World Trade Organization patent regime in 2005 is driving a transformation of the industry. Key elements of the present shake-up include the return of 'big pharma' companies on a large scale and the emergence of several Indian firms that aim to become fully-fledged research-based multinationals. This article provides a description of the development and structure of the Indian pharmaceutical industry and explores questions and challenges arising from its integration into global markets.