| | Almost all earlier studies comparing pharmaceutical prices in Pakistan and India have attributed higher prices in Pakistan mainly to the differences in the intellectual property rights regime between the two countries. That Pakistan permits product patents while India does not is factually incorrect. This paper argues that a weak patent regime combined with policies to reduce market concentration, curb monopolies and encourage bulk drug production, initially through public sector investments, and the size of the Indian market could have led to development of indigenous process capabilities. Meanwhile, in Pakistan, the same patent policy was not combined with policies adopted in India and since the market size is much smaller, it did not have the same effect.
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