The Drug Industry is a highly R&D oriented sector in which there is a very high rate of obsolescence. This sector has also been identified as one of the thrust areas for exports. There is, therefore, need to ensure that the technologies used in the country are cost effective and efficient. It is necessary to attract greater investment into this sector in order to update the existing technologies and for bringing into the country technologies which are not currently available. At the same time it has to be noted that the Indian companies have achieved considerable stature in terms of production as well as in marketing ability and indigenous technology has also reached a commendable level in many cases. However, in view of GATT accord and impending changes in Patent Laws, the subject matter of Basic Research in drug sector has assumed greater importance and needs to be attended to on an urgent basis.