Ranbaxy Laboratories

Topics: Generic drug, Pharmaceutical industry, Ranbaxy Laboratories Pages: 28 (8012 words) Published: March 20, 2013
Ranbaxy Laboratories Ltd. |

"Personally, I feel that companies who constantly innovate to provide better products and services and who can offer superior value propositions to the consumer are the ones likely to command more respect globally than others”

Malvinder Mohan Singh, former CEO and MD, Ranbaxy Laboratories Ltd

Table of Contents
Executive Summary5
The Company5
Hybrid Business Model6
Porter’s Five Force Analysis7
Bargaining Power of Buyers8
Bargaining Power of Suppliers9
Threat of New Entrants10
Threat of Substitutes11
Threat of Rivalry12
Value chain analysis13
Inbound logistics13
Outbound logistics13
Sales and marketing13
Technological Development14
Human Resource Management14
Firm Infrastructure14
VRIO Analysis16
Internal Analysis- A Resource Based View16
Factors Leading to Growth18
Business-level Strategy18
Focus on Differentiated Products18
Corporate-level Strategy20
R&D in Ranbaxy20
NDDR – A separate Entity Decentralization20
First Mover Advantage20
Information Security and Information Synergy21
Agreements and Collaboration22
Medium term Strategy (5-7 years)23
Long term Strategy (10-15 years)25
I. Market Share27
II. Market Structure & Herfindahl-Hirshman index27
IV. Market Forecast31
V. Competitor Analysis31
VI. Ranbaxy Financials32
VII. Pharmaceutical Industry Future33
VIII. Conservation of energy and its impact37

Executive Summary

Product patent regime implemented in India from Jan 2005 compelled Indian pharma companies to relook in to their marketing strategies so as to become competitive & strongly withstand in the competition with MNC’s & big giants in domestic markets. Product patent regime posed Indian pharmaceutical companies to change their strategies. If the Indian companies wanted to withstand in competition & survive, they have to invest more in the R&D for development of New Chemical Entities (NCE’s). Before patent regime, with the help of reverse engineering & process patent companies were enjoying copying MNC’s molecules & introducing their own brands & investing less in NCE’s.

The rapid growth of the Indian Pharmaceutical Industry was sponsored by the non-recognition of product patents for drugs under the Indian Patent Act, 1970. However, the case reversed with the advent of signing of the TRIPs agreement. This change ensured that firms should reorient themselves for R&D-based innovation to survive. This would enable them to compete in regulated and open market. Ranbaxy Laboratories Ltd. adopted a “High-Risk-High-Returns” strategy to respond to the challenging business environment brought about by the introduction of the new patent regime. But the financial health of the firm was affected severely by the increasing expenditures on risky R&D and patent challenges with inadequate returns. High cost acquisitions in foreign markets and setting own manufacturing & selling facilities abroad in order to increase its geographical presence added further to the problem. Eventually, Ranbaxy had to redefine its business model. In 2008, a strategic combination of an innovator and generic powerhouse was brought in by Ranbaxy by selling its 63.92% shares to Daiichi Sankyo Company Ltd. The study reveals how Ranbaxy adopted a new strategy every time the company confronted a new challenge in the ever so changing scenario of Indian Pharmaceutical Industry. From pioneering the art of reverse engineering and becoming a cost-effective firm globally, the firm went on to become the first Indian Pharmaceutical firm to launch the first original drug developed by an Indian entity, Synriam, and reaping profits by way of para IV filings for the star-drug Lipitor. Ranbaxy made a way out through its strategies to...
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