Welfare implications of imposing intellectual property rights (IPR) protection on health goods in developing countries are analysed using a North–South model. Consumption of health goods counteracts adverse effects of region‐specific diseases on labour supply. Health needs differ between consumers in innovating and imitating countries, weakening the benefits of southern IPR enforcement for the North and strengthening the benefits for the South. Southern regions with unique health needs are more likely to benefit from IPR enforcement if healthcare infrastructure is adequate and the southern market is large enough to stimulate sufficient innovation. There is then also interregional income convergence.