If several pharmaceutical companies across the world have mastered the fine art of manipulating clinical trials of drugs, a new trend noticed in India is disturbing. And that is the practice of Indian pharmaceutical companies and clinical research organisations (CRO) setting up, or acquiring a stake in, hospitals. This development comes at a time when the new law providing for product patents obliges Indian drug companies to discover new molecules. What is disturbing about conducting a trial in a hospital owned by a pharmaceutical company or even an independent CRO is that the clinical investigator faces a blatant conflict of interest. The outcome from such trials may be compromised even when the trials are multi-centric, as pharmaceutical companies tend to use only results that are favourable to them. Medical ethics demand that investigators have no vested interest that might influence, or be perceived to influence, the outcome of trials. When holding shares is considered a conflict of interest, having the trial conducted by an employee of the company will be totally unacceptable to any code of professional ethics. Another dimension to the issue is the possibility of such hospitals doubling as channels to promote company drugs, with the hospital owner’s drugs being prescribed when there are more efficacious and less expensive drugs available from other sources. Phase IV trials, supposedly to study the long-term effects of drugs in the market, may become commonplace in these hospitals. In such a situation, the drug controller must strictly enforce rules regarding conflicts of interest and check for other kinds of commercial malpractice. There can be no room for complacency where the health of ordinary citizens is at stake.