The bad phase of multinational drug companies in India began in the seventies when the Indian Patent Act was notified. This had led to the discontinuation of the system of product patent and adoption of process patent for industries in the country. Then came the Drug Policy of 1978 which clearly discouraged the growth of multinational drug companies. The Policy directed the MNCs to dilute their foreign holdings to 40 per cent if they are making only formulations and if not engaged in any high tech bulk drug manufacturing. Most of the MNCs found that this sudden change in the policy environment too harsh for their unhindered profit making from the pharma business and thus chose either to exit from India or to lie low. However, things have started to change in the nineties when the Central government adopted the policy of economic liberalization. Prospects of the MNCs once again started looking bright with the government welcoming unrestricted foreign direct investment in most of the industrial sectors. The drug policy announced in 1994 with just 74 drugs under price control gave a great encouragement to foreign drug companies. Then came the amendment of the Patent Act in 2005 allowing product patent once again giving a clear advantage to MNCs in exclusive marketing of expensive drugs in the Indian market. MNCs have thus launched several costly drugs in the country as there is no price control on patented drugs. Huge profits from the sales of patented drugs during the last three years have emboldened the MNCs to take the next step of controlling the pharmaceutical market of India. The strategy of raising the parent holdings in the Indian subsidiaries and acquiring the major domestic companies is all part of this new agenda of the MNCs. The first signal of this trend was noticed when promoters of Hyderabad based Matrix Labs sold their majority stake to the US based MNC, Mylan Laboratories in 2006. Then came the big shock of the sell off of India's No 1 pharmaceutical company, Ranbaxy, to the Japanese multinational, Daiichi, in 2008. A few weeks back, Novartis AG made an open offer to raise its stake in its Indian subsidiary, Novartis India, to 90 per cent from 50.9 per cent. Pfizer Inc. also decided to raise its stake in its Indian arm from present 41.23 per cent to 75 per cent through an open offer from public. The sale of the controlling stake by the Ranbaxy promoters to Daiichi last year had actually dampened the spirit of the first generation pharmaceutical entrepreneurs who built a strong Indian sector over the years. Of late, there have been unconfirmed reports of possible sales of the controlling stakes in Cipla and Dr. Reddy's Labs and Piramal Healthcare to some other MNCs. Poor performance of top Indian pharmaceutical companies during last two years, crash of the share prices since the beginning of 2008 and utter failure in the new drug research front have all weakened these companies further. Declining interest in pharmaceutical sector amongst the second generation promoters within these companies is yet another disturbing trend. These sudden and unexpected developments in the pharmaceutical sector can bring back a situation of multinationals ruling the pharmaceutical market of the country. And that will inevitably push the country once again to an era of high prices for most drugs sold in the domestic market.