Case Study

Eli Lilly case questions

1) Did Eli Lilly pursue the right strategy to enter the Indian market?

· It was a right strategy.

· Ranbaxy was the second largest pharmaceutical company that manufactures bulk drugs and generic drugs in India, with a domestic market share of 15 per cent. It had established broad distribution network, and it was the second largest exporter of all products in India. Ranbaxy’s capital costs were 50 per cent to 75 per cent lower than those of comparable U.S. plants.

· The timing was perfect to enter the Indian market. During 1970s, the Patents Act 1970 and the Drug Price Control Order (DPCO) was issued and India was opening its drug market.

· There was possibility to conduct cheap clinical trials in India.

2) Carefully consider the evolution of the joint venture? Evaluate the 3 successive IJV leaders. Can you identify any unique challenges faced by each leader?

· Andrew Mascarenhas was the first managing director of the joint venture. Created the JV’s team, positioned it in the market, and set its operations developing the marketing strategy. Challenges he faced were hiring sales force, recruiting doctors, and financial staff. He trained them on the company's value, philosophy and ethical conduct. The JV reached break-even and was becoming profitable at the end of his managing time.

· Chris Shaw built systems and processes to bring stability to the fast growing organization.

· Rajiv Gulati enlarged the staff to correspond the growing company and created a medical and regulatory unit to handle the product approval processes with the government.

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

· JV has a good performance and was profitable for the both parties.

· Eli Lilly got benefits from acquiring low-cost sources and clinical trials, possibility to export to Russia, presence on the Indian market sheltered under Ranbaxy's name as well as knowledge of the Indian market and local peculiarities.

· Ranbaxy obtained good image in the Indian market due to Lilly’s code of ethics practiced by JV’s sales force, it grew and received access to a number of international markets, including the USA.

4) What action would you recommend regarding the Ranbaxy partnership? What are the implications of your recommendation? Assume you are in a meeting between Eli Lilly executives and Ranbaxy executives, how would you …

· Eli Lilly did not launch some of its products due to weak intellectual property in the JV time. Also, because it did not want to give it away to the Indian companies.

· Now it can launch products, since the new Indian law allowed 100% foreign capital firms, and the new entities would be granted product patent recognition.

· Ranbaxy was experiencing cash flow difficulties due to its network of international sales and selling its share would have been a chance to improve its financial situation.