Eli Lilly Case
Eli Lilly in India: Rethinking the Joint Ventures Strategy I. Brief Summary
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 …show more content…
Within these deep regulatory changes, would the JV still have any sense and represent any benefits for either of its partners?
III. Strategic Statements
As we have reviewed in the course, as companies become global they need to keep creating value or appropriating value as they expand and at the same time keep protecting potential profits from the threats of competitors or from the bargaining power of suppliers, customers and government. Sometimes due to costs, product life-cycles or barriers to enter new markets, in order to keep growing and increasing sales, companies had to build collaborative relationships with other firms. This is the case of Eli Lilly and Ranbaxy in India. Government restrictions and power of competitors and suppliers moved Eli Lilly to sign a joint venture with local Ranbaxy in order to enter the Indian market in 1993.
Joint Venture Eli Lilly Ranbaxy Strategic Purposes: * The decision to form a strategic Joint Venture was dictated by the conditions of the US market and opportunities of the Indian market. Costlier manufacturing practices due to strict governmental control, soaring prices in 1990s, invasion of cheap generics to the USA market as opposed to low costs in India and new regulations that opened Indian market to foreign investments (up to 51%) created tempting conditions to enter one of the emerging huge markets of the world. * Eli Lilly alliance with Ranbaxy was a smart strategy for Eli Lilly to