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In order to ensure their population's regular access to essential medicines, many countries are faced with the policy question of whether to import or manufacture drugs locally. For domestic manufacturing to be viable and cost-effective, the local industry must be able to compete with international suppliers of medicines. This paper considers the 'make-or-buy' dilemma by using Tanzania as a case study. Key informant interviews, event-driven observation, and purposive sampling of documents were used to evaluate the case study. The case study focused on Tanzania's imitation technology transfer agreement to locally manufacture a first-line ARV (3TC + d4T + NVP), reverse engineering the ARV. The study finds that Tanzania is limited by weak political support for the use of Trade-Related Aspects of Intellectual Property Rights (TRIPS) flexibilities, limited production capacity for ARVs and limited competitiveness in both domestic and regional markets. The Ministry of Health and Social Welfare encourages the use of flexibilities while others push for increased IP protection. Insufficient production capacity and lack of access to externally -financed tenders make it difficult to obtain economies of scale and provide competitive prices. Within the "make-or-buy" context, it was determined that there are significant limitations in domestic manufacturing for developing countries. The case study highlights the difficulty governments face to make use of economies of scale and produce low-cost medicines, attract technology transfer, and utilize the flexibilities of the WTO Agreement on TRIPS. The results demonstrate the importance of evaluating barriers to the use of TRIPS flexibilities and long-term planning across sectors in future technology transfer and manufacturing initiatives.