Preview

Case 6-3 Eli Lilly in India: Rethinking the Joint Venture Strategy

Powerful Essays
Open Document
Open Document
3230 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
Case 6-3 Eli Lilly in India: Rethinking the Joint Venture Strategy
The case consists of two major pharmaceutical companies that joint to collaborate their research and pharmaceutical technologies to start a joint venture in India. Both have valuable resources that have benefited both companies during the joint venture. Now both are questioning if there is still any value in maintaining the joint venture in India and will be deciding what will be the best route to take. Ranbaxy Laboratories wants to be bought out, but Eli Lilly is worried of the financial implications of such move. There were two pharmaceutical companies that were looking for ways to expand globally to position themselves in a competitive advantage from their competitors. One was located in the United States, which was Eli Lilly and Company and the other one was located in India, which was Ranbaxy Laboratories. Research and development was crucial to Lilly’s long-term success. Ranbaxy Laboratories was a firm that was evolved into a serious research-oriented firm. With the change, in the government, India was attracting foreign investors in the pharmaceutical industry. Lilly decided to form the joint venture in India to focus on marketing Lilly’s drugs there, and a formal JV agreement was signed in November 1992. The main key issues of this case are as follow. The pharmaceutical industry had come about through both forward integration from the manufacture of organic chemicals and a backward integration from druggist-supply houses. The industry’s rapid growth was aided by increasing worldwide incomes and a universal demand for better health care; however, most of the world markets for pharmaceuticals were concentrated in North America, Europe and Japan. Drug discovery was an expensive process, with leading firms spending more than 20 per cent of their sales on research and development (R&D). Developing a drug, from discovery to launch in a major market, took 10 to 12 years and typically cost US$500 million to US$800 million (in 1992). Bulk production of active
Continue Reading
View Writing Issues

You May Also Find These Documents Helpful

  • Satisfactory Essays

    Eli and Lilly
    • 462 Words
    • 2 Pages

    Eli and Lilly

    It was not wrong to be a partner with Ranbaxy. Ranbaxy was the leading domestic pharmaceutical firm in India. And based on the government of India began the process of liberalization and the increase of foreign ownership, the best way for Eli and Lilly was to be a partner of a local pharmaceutical firm. In this case, the partnership is a good thing for both Ranbaxy and Eli and Lilly.…

    • 462 Words
    • 2 Pages
    Satisfactory Essays
    Read More
  • Satisfactory Essays

    Eli Lilly in India: Rethinking the Joint Venture Strategy
    • 914 Words
    • 4 Pages

    Eli Lilly in India: Rethinking the Joint Venture Strategy

    In 1993 Eli Lilly, one of the leading pharmaceutical firms in the USA, started a joint venture in India with the leading Indian company Ranbaxy. The decision was dictated by the conditions of the US market and opportunities of the Indian market.…

    • 914 Words
    • 4 Pages
    Satisfactory Essays
    Read More
  • Good Essays

    Eli Lilly in India: Rethinking the Joint Venture Strategy
    • 426 Words
    • 2 Pages

    Eli Lilly in India: Rethinking the Joint Venture Strategy

    They must to search who could help outside the country. That is efficient way to raise their competition ability. And the JV is fair because Lilly obtained 50 percent of shareholding and Ranbaxy obtained the other 50 percent of shareholding, they had equal equity ownership. Furthermore, in the JV, each company had 3 directors for the board of directors and one director for the management…

    • 426 Words
    • 2 Pages
    Good Essays
    Read More
  • Satisfactory Essays

    Eli Lilly Case
    • 552 Words
    • 3 Pages

    Eli Lilly Case

    Eli Lilly was a recognized brand United States. However, that was not the case in India. Ranbaxy was the leader company within in India, which gave competitive advantage to the Eli Lilly Ranbaxy JV. After reviewing the case, I feel that without the facilitation of the Joint venture, Eli Lilly may not have been as successful operating in the India market. Higher capital investment would have been necessary, which in return would have meant higher risk of loss and a lot more time before reaching the break-even point. The Eli Lilly Ranbaxy joint venture allowed Eli Lilly to acquire brand recognition, establish a corporate culture, facilitated distribution and government procedures, minimized errors, and lessened risk. The case recalled Gulati: “We used Ranbaxy’s name for everything. We were new and it was very difficult for us…” which heavily reflects the advantages of the joint venture with Ranbaxy. Such factors had a great influence in the success of the Eli Lilly’s company in India, which is why I believe that Eli Lilly pursued the right strategy to enter the Indian market.…

    • 552 Words
    • 3 Pages
    Satisfactory Essays
    Read More
  • Good Essays

    Eli Lilly Case
    • 3871 Words
    • 16 Pages

    Eli Lilly Case

    Global pharmaceuticals had presence in India since early 80’s and it was not until 1993 that Eli Lilly International decided to establish a Joint Venture with India’s second largest laboratory and exporter, Ranbaxy. This move happened in a very challenging context as both companies have very different profiles and backgrounds. The main differential characteristic was the nature of their products. While Ranbaxy was focused on generics and in other intermediate products, Eli Lilly International core business was the commercialization and development of new drugs through an aggressive R&D strategy. The trigger for Eli Lilly to start thinking of going into India was the liberalization process in pharmaceutical markets as a consequence of the change of the economic model from import-substitution to an export-oriented. The foreign ownership was allowed to be 51% (rose from 30%) and additional free market conditions were expected for the coming years. Despite this trend, there were many restrictions that Eli Lilly would have faced if they did not count with a local partner. These include access to government pharmaceutical and health relevant authorities, an adequate logistics and distribution system, and manufacturing facilities. For Ranbaxy, the main objective was to gain additional market share and increase in sales. The Joint Venture was established, and worked through the years with good results. Ranbaxy (including Eli Lilly) went from the 3rd place in market share in 1996, to the first place in year 2000.…

    • 3871 Words
    • 16 Pages
    Good Essays
    Read More
  • Powerful Essays

    History of Indian Pharma Industry
    • 11914 Words
    • 48 Pages

    History of Indian Pharma Industry

    The lack of patent protection made the Indian market undesirable to the multinational companies that had dominated the market, and while they streamed out. Indian companies carved a niche in both the Indian and world markets with their expertise in reverse-engineering new processes for manufacturing drugs at low costs. Although some of the larger companies have taken baby steps towards drug innovation, the industry as a whole has been following this business model until the present.…

    • 11914 Words
    • 48 Pages
    Powerful Essays
    Read More
  • Powerful Essays

    The Merger of Ranbaxy and Daiichi
    • 1123 Words
    • 5 Pages

    The Merger of Ranbaxy and Daiichi

    Daiichi Sankyo bought Ranbaxy for $4.6 billion in June 2008. This report studies the implications of the merger between Ranbaxy and Daiichi Sankyo, from an intellectual property as well as a market point of view. There are many critical events happening in international pharma market including the growing preference for generics, increasing dominance of emerging markets such as India, fast approaching patent expiry etc. Also, this deal involves 2 major players who are the largest among their respective markets.…

    • 1123 Words
    • 5 Pages
    Powerful Essays
    Read More
  • Good Essays

    Ranbaxy Leadership Casestudy
    • 1039 Words
    • 5 Pages

    Ranbaxy Leadership Casestudy

    Ranbaxy is a true pioneer among Indian companies, in terms of globalization. The company's entry into global markets has been a proactive, well-planned effort. Ranbaxy's attempts to globalize received a major boost when Dr. Parvinder Singh took over as Chairman and MD in 1993 from his father, Bhai Mohan Singh. Dr. Parvinder decided to remain focused on the pharmaceuticals business. But he realized he had to find new markets. He was confident that Ranbaxy could use its core strengths to tap global markets. Dr. Parvinder articulated the company's mission of becoming a research-based international company. By the late 1990s, Ranbaxy had successfully penetrated several overseas markets, including Russia, China, US and several European countries. By 2000, Ranbaxy was generating almost 50% of its sales outside India. After the demise of Dr. Parvinder, DS Brar, the new CEO had given a fresh impetus to the globalization process.…

    • 1039 Words
    • 5 Pages
    Good Essays
    Read More
  • Good Essays

    Repositioning Ranbaxy
    • 897 Words
    • 4 Pages

    Repositioning Ranbaxy

    The Indian market was governed by price controls in the 1970s and 1980s – a situation that did not incentivise research. This, coupled with low per capita income resulted in demand for drugs that was not very high in sophistication. The bias for small scale resulted in over-capacity that led to excessive price competition. This kind of rivalry in the domestic market prompted Ranbaxy to adopt a differentiation strategy. Ranbaxy tried to create differentiation through Marketing and Process Technology. This resulted in improved product/brand profitability, and an increase in brand life cycle, similar to the post-patent approach adopted by many research-based companies. At about the same time, Ranbaxy embarked on an export drive. This gave Ranbaxy improved margins, an entry-point into several international markets, and an opportunity to spread its risks away from the controlled Indian market. Without doubt Ranbaxy was blessed with benign factor conditions: significant cost advantages in R&D and in manufacturing. The role of supporting industries was not very significant as import of bulk drugs, that were not produced domestically, was allowed by the Indian government…

    • 897 Words
    • 4 Pages
    Good Essays
    Read More
  • Good Essays

    Ananlysis Dr. Reddy's Lab
    • 1106 Words
    • 5 Pages

    Ananlysis Dr. Reddy's Lab

    • After this extraordinary achievement of bein first Indian company to expand overseas, Dr. Reddy, formed four pillar based strategy comprising - product diversification, international expansion with branded formulation, & growth in Generic businesses. It was also well supplemented by efforts in building of capabilities in new drug discoveries to set required vision in front of the rapidly growing organization. This is considering the overall vision of Dr. Reddy himself who wanted not only acquire wealth but also quench his thrust of doing R&D in chemical sector.…

    • 1106 Words
    • 5 Pages
    Good Essays
    Read More
  • Powerful Essays

    Daiichi's Acquisition of Ranbaxy
    • 2564 Words
    • 11 Pages

    Daiichi's Acquisition of Ranbaxy

    Ranbaxy Laboratories Limited, India's largest pharmaceutical company, was an integrated, research based, international pharmaceutical company producing a wide range of quality, affordable generic medicines, trusted by healthcare professionals and patients across geographies. It was incorporated in 1961 by Singh's grandfather Bhai Mohan Singh, further his son Dr. Parvinder Singh succeeded it, transforming Ranbaxy into India’s first multinational drug firm. It went public in 1973. In 1990 Ranbaxy Granted US patent for DoxyCyline. In 1992 Ranbaxy entered into an agreement with Eli Lilly & Co. of USA for setting up a joint venture in India to Market Select Lilly Products. It was Ranked 8th amongst the global generic pharmaceutical companies, its stated vision has been to be among the top five global generic players and to achieve global sales of $5 billion by 2012.…

    • 2564 Words
    • 11 Pages
    Powerful Essays
    Read More
  • Powerful Essays

    Ranbaxy's Interview Process
    • 3560 Words
    • 15 Pages

    Ranbaxy's Interview Process

    In June 2008, Ranbaxy entered into an alliance with one of the largest Japanese innovator companies, Daiichi Sankyo Company Ltd., first by purchasing 34.8% of the total stakes followed by 64.2% in November 2008, to create an innovator and generic pharmaceutical powerhouse. The combined entity now ranks among the top 20 pharmaceutical companies, globally. The transformational deal will place Ranbaxy in a higher growth trajectory and it will emerge stronger in terms of its global reach and in its capabilities in drug development and manufacturing.…

    • 3560 Words
    • 15 Pages
    Powerful Essays
    Read More
  • Powerful Essays

    project report on ranbaxy
    • 9475 Words
    • 38 Pages

    project report on ranbaxy

    The Indian pharmaceutical industry is at the center stage in the global healthcare arena and Ranbaxy endeavors to be at the forefront in delivering the India centric advantages to the advanced and developing countries of the world.…

    • 9475 Words
    • 38 Pages
    Powerful Essays
    Read More
  • Good Essays

    Healthcare - India M&a
    • 6226 Words
    • 25 Pages

    Healthcare - India M&a

    The last decade has seen significant consolidation in the Indian Pharmaceutical Industry driven by acquisition of large Indian generic manufacturers by top global pharmaceutical firms (such as Piramal’s and Ranbaxy’s takeover by Abbott and Daiichi Sankyo respectively). The Indian pharmaceutical industry is worth $4.5bn today and is growing at 15%+.It presents several attractive opportunities for global pharmaceutical companies. First, it gives them access to the developing world. Given the fragmented nature of the industry it is an enormous task for a company to set-up operations from scratch. An acquisition gives them customer base and distribution network. Second, it gives them cheap manufacturing facility/ labour. A third reason could be product integration – it gives the acquirers a basket of generics that they can promote in the global market. This paper also looks at the issue of patent expiration. There are a couple of companies working on the M&A format either to take over a R&D division of another company or looking at expanding their global footprint by leveraging the distribution, supplier, and intellect network of the acquired company. We will also be analyzing some instances of Indian companies acquiring foreign pharma companies. Again, the main driver of such acquisitions seems to be the desire to expand domestic generic business to international markets by leveraging the distribution networks of established companies. This paper will try to uncover some of these motivations and discuss how the companies have been faring post acquisition as also what were some of the key growth drivers…

    • 6226 Words
    • 25 Pages
    Good Essays
    Read More
  • Better Essays

    Fall of Ranbaxy
    • 927 Words
    • 4 Pages

    Fall of Ranbaxy

    Ranbaxy first attracted the attention of global pharmaceutical industry by creating relatively simple process to produce complex new drug molecule invented by Eli Lilly. Thus leading to Lilly outsourcing the production of this drug to Ranbaxy and later forming a couple of joint ventures. Under the leadership of Parvinder Singh, it was one of the first Indian companies to accept TRIPS and focus on creation of new chemicals. Under him the company prospered and became one of the first Indian companies to become a MNC.…

    • 927 Words
    • 4 Pages
    Better Essays
    Read More