Case Study

Yes, Eli Lily did pursue the right strategy to enter the Indian market by starting a joint venture with Ranbaxy. Firstly, in manufacturing generic bulk drugs in India, Ranbaxy was the second largest pharmaceutical company that had a local market share of 15 per cent. Also being the second largest exporter of all products in India, it established extensive supply networks and its capital costs were up to 50 to 75 percent lower than as compared to the U.S. plants. Secondly, during 1970s, the Patents Act of 1970 and the Drug Price Control Order (DPCO) was also issued and India was inaugurating its own drug market, thus it was the perfect time for Eli Lilly to enter the Indian market. Lastly, there was also a likelihood to conduct inexpensive clinical trials within India.

2) Considering the evolution of the JV, evaluate the challenges that JV leaders faced in each phase.

Andrew Mascarenhas, the original managing director of the joint venture, generated the JV’s team, placed it on the market, as well as, set its operations developing the marketing strategy. The challenges that JV leaders faced in each phase were the employing of sales officers and recruiting financial staff and doctors. Andrew Mascarenhas also educated them on the company's philosophy, ethical conduct and values. The JV reached a break-even and became lucrative at the end of his managing time.

Rajiv Gulati shaped a regulatory and medical unit in order to manage the product approval processes with the government, as well as, extended the staff to match to the growing needs of the company.

Lastly, Chris Shaw built processes and systems to bring about steadiness towards the quick growing organization.

3) How would you assess the overall performance of the JV? What did the partners learn from the experience?

According to me, JV’s overall performance was quite good. JV proved profitable for both the parties. Eli Lilly received profits from obtaining low-cost clinical trials and sources, as well as opportunity to export to Russia, and the existence on the Indian market privileged under the name of Ranbaxy. Eli Lilly also received information of the Indian market and the local particularities that Eli Lilly gained due its collaboration with Ranbaxy.

Ranbaxy, on the other hand, acquired a good repute in the Indian market because of Eli Lilly's Code of Ethics. Practiced by JV's sales force, it progressed and received entrée to various international markets, including the USA.

4) What actions would you recommend regarding the Ranbaxy partnership? What are the implications of your recommendation? How would you implement this?

Eli Lilly failed to promote a few of its products because of weak intellectual property in the JV times and also because it did not want to hand it away to the Indian companies. However, it could now do so because the new Indian law now approved hundred percent foreign capital firms, as well as, the new entities would be allowed product patent recognition.

Ranbaxy was facing cash flow problems because of its network of international sales and vending its share would have been an opportunity to recover its financial condition.