An analysis of the innovation in the Indian pharmaceutical industry is done. This section traces the origins, the strengths and weaknesses of the innovation system in the pharmaceutical sector in India, and its industrial structure and activities, in order to establish the importance of the Indian industry for access to medicines in the developing world today. This section also arrives upon a categorization of firms in the Indian industry, based on empirical data, which is used in the rest of the study to draw conclusions on various issues. A discussio of the main changes that are forcing a transition in the industry today, of which the introduction of product patent protection is the main one.