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Since the mid-twentieth century, the national objective of India and Brazil has been to develop industrial capabilities in essential sectors such as pharmaceuticals. At the outset they shared some common features: a considerable period of lax intellectual property rights regimes, a large internal market and a reasonably strong cadre of scientists and engineers. However, over sixty years, India has had much more success in building indigenous capabilities in pharmaceuticals than Brazil, at least to date. Why? In exploring the answer to this question we show that in both countries the design of State policy played a crucial role and the endogenous responses in the national system of innovation consisted of two parts. On the one hand, most of the time, the predicted and desired outcome was partially realized and on the other hand, there were invariably, other unpredicted responses that emerged. The latter unexpected elements, which were specific to the two countries, pushed them along distinctive trajectories. © 2011 Elsevier B.V.