Indian Pharmaceutical Industry: The Case of Lilly and Ranbaxy

Lilly and Ranbaxy
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Abstract
The pharmaceutical industry has experienced some major changes over the years, relative to the changes in the complexity of the diseases in the population, research and the development of policies ("The Challenges with Mergers & Acquisitions", 2016). With the element of globalization, companies have ventured in the global markets. Furthermore, they have formed joint ventures with other companies to take advantage of logistics and experience in the various markets. One such arrangement is between Ranbaxy and Eli Lilly. Ranbaxy has been in the Indian market and has mastered the industry dynamics in the region and as such Lilly approached to the company to form a joint venture. The venture has been successful relative to the fact that, the two companies have similar goals, ethical backgrounds and stand on patent policies going into the future (Bartlett & Beamish, 2011).
Eli Lilly and Ranbaxy
The choice to enter the Indian was a smart choice and one that would later define the company’s success. One of the most crucial element of the joint venture was the choice of the company to work with. This is relative to the fact that Ranbaxy is one of the biggest companies in India. This is a company that has managed to penetrate the Indian market for decades. This means that this is a company has had quite some fundamental experience in the Indian market and given that Lilly was new in the market, joining up with a market player in the region was crucial. In India, Ranbaxy, was the leading company which further indicates that, working with it would give Lilly the traction that it needed to ensure that it was penetrating the market within the shortest time possible (Bartlett & Beamish, 2011). According to the case study, Ranbaxy by the 1990s had become the leading manufacturer with reference to drugs and even generic drugs. Statistically, this was a company that working with an estimated 15% of the domestic market. Ranbaxy, has already established its channels and thus Lilly would easily rely on these ground channels to make sure that it would easily make the inroads within India and the rest of the region. The aspect to consider is associated with the fact that Ranbaxy, was research oriented. This means that, this is a company that is also in line with the strategies that Lilly had been using in the American market and even globally. As such, this would be an easy company to work with relative to the fact that it also had some element of aligned goals, with reference to those of Lilly. One of the most crucial element relative to forming alliances in global businesses, is the fact that the partners have to ensure that they some element of similarity. This could be in terms of culture or even the goals and aspects of operations (Bartlett & Beamish, 2011). As such, it now becomes much easier to formulate a way forward where there is not so much lag before the two companies can work on developing a common ground. As stated in the case study, Singh, argued that the company was looking to ensure that they focused research with an international twist to their approach. Other than the fact that the two companies had some element of common ground on research approaches, they also had some common element with reference to the technology, innovation, ethical standards and the general support for the patents in the future with reference to the Indian market. As mentioned above, this reduces the element of differences between the companies and the strategies that they will apply along with what values they hold. As such, the basic goals that they would form, would be easily managed into a continuum, that works for the two (Bartlett & Beamish, 2011).
When the joint venture was formed between Lilly and Ranbaxy, the arrangement included getting three directors from each of the company, a management committee that comprised of two directors with one coming from each of the company. The companies also agreed to contribute US$ 7.1 million for the capital of the venture and an initial subscribed capital of an estimated US$ 3 million. This was money that supposed to be contributed equally between the two parties. The made arrangements to market generics both in India and the united states. These are just a few of the elements that are associated with the joint venture between the Ranbaxy and Lilly....