Background: The Pharmaceutical industry has always been fostered with a culture of radical innovation. Nevertheless, the significance of radical innovation is yet unrealized by the Indian pharmaceutical firms.  Introduction: The Indian pharma companies often seek immediate profit avenues rather than investing in radical innovation. They lead by imitation than innovation. This has been majorly due to the lax intellectual property laws in the country. Objectives: This paper ruminates on the significance of a stringent intellectual property regime and its impact on profitability and innovation. Result: The findings of the study indicate that increased R&D intensity enhances innovation. Furthermore, this relationship is bolstered in the presence of a stringent intellectual property regime. The findings also indicate that enhanced innovation activity increases the profitability of the firms. Conclusion: Innovation activity is enhanced in presence of a stricter intellectual property regime, and this indeed has a positive impact on the firm profitability as well. Hence, as the results of the study indicate, the pharmaceutical firms in India should be encouraged to invest in research and development, especially considering the stricter patent laws. It will help firms bolster their profitability and have a sustained competitive advantage in the industry.

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