Firms in developing countries are characterized by weak technological capacities, insufficient human capital, and limited R&D. Consequently, these countries also produce fewer patents. Considering these disadvantages, companies in developing countries cannot rely on their in-house R&D efforts; they must import nonincorporated or soft technologies (license and technical-assistance agreements, and tacit knowledge transfer). In the pursuit of technological improvement, firms attempt to adopt an optimal technology acquisition strategy. This essay examines the use of in-house R&D and technology transfer in the Mexican pharmaceutical industry between 1994 and 2000 by using two econometric models. Unlike the pharmaceutical industries of other developing countries such as India and China, this study indicates that there is a low probability of complementarity between R&D and technology transfer in the Mexican pharmaceutical industry. This is a strategy that has been adopted only by some larger firms and multinationals.