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  • Winter 2018 BUMT 4300: Global Management Strategies Case Study

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    Eli Lilly entered the Indian market through a joint venture with Ranbaxy in the 1970s. Over time, the joint venture grew significantly under three successive managing directors as they expanded operations and staff. While the partnership was profitable for both companies and provided learning opportunities, their differing strategic focuses on innovation versus generics meant it was now time for them to operate independently to better pursue their core business activities and control decision making. The document recommends ending the joint venture so Eli Lilly and Ranbaxy can each concentrate on their own areas and implement new strategies suited to current market conditions in India.

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    Eli Lilly entered the Indian market through a joint venture with Ranbaxy in the 1970s. Over time, the joint venture grew significantly under three successive managing directors as they expanded operations and staff. While the partnership was profitable for both companies and provided learning opportunities, their differing strategic focuses on innovation versus generics meant it was now time for them to operate independently to better pursue their core business activities and control decision making. The document recommends ending the joint venture so Eli Lilly and Ranbaxy can each concentrate on their own areas and implement new strategies suited to current market conditions in India.

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    84 views3 pages

    Winter 2018 BUMT 4300: Global Management Strategies Case Study

    Uploaded by

    Gunjan
    Eli Lilly entered the Indian market through a joint venture with Ranbaxy in the 1970s. Over time, the joint venture grew significantly under three successive managing directors as they expanded operations and staff. While the partnership was profitable for both companies and provided learning opportunities, their differing strategic focuses on innovation versus generics meant it was now time for them to operate independently to better pursue their core business activities and control decision making. The document recommends ending the joint venture so Eli Lilly and Ranbaxy can each concentrate on their own areas and implement new strategies suited to current market conditions in India.

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    © All Rights Reserved
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    of 3

    Winter 2018 

    BUMT 4300: Global Management Strategies 

    Case Study  

    Eli Lilly in India: Rethinking the Joint Venture Strategy 

    For: Dr. Manuel A. Escalante  

    15 February 2019 - 8:30 AM  


    Eli Lilly in India: Rethinking the Joint Venture Strategy. Pg. 392 

    1. Did Eli Lilly pursue the right strategy to enter the Indian Market? 
    I believe Eli Lilly made the right decision by starting a joint venture with Ranbaxy 
    to enter the Indian market. First of all, Ranbaxy was the second largest 
    pharmaceutical company that manufactures bulk drugs and generic drugs in India, 
    with a domestic market share of 15%. It had established broad distribution network 
    and it was the second it was the second largest exporter of all products in India. 
    Ranbaxy’s capital costs were 50% to 75% lower than those of comparable U.S. 
    plants. Also, the timing was perfect for Eli Lilly 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. Additionally, there was possibility to 
    conduct cheap, clinical trials in India.  
     
    2. Carefully consider the evolution of the joint venture. Evaluate the three successive 
    JV leaders. Identify the unique challenges faced by each.  
    ● Andrew Mascarenhas was the first managing director and was building the 
    JV’s team, positioning the JV in the market, setting its operations developing 
    the marketing strategy and enlarging the staff later on. Challenges he faced 
    included hiring sales forces and recruiting doctors and findinging people and 
    training them on the company's philosophy and communicating Eli Lilly's 
    values and code of ethical conduct. He introduced a new scheme of HR 
    management to cpe with a high turnover rate. At the end of his managing 
    time, JV reached break-even and was becoming profitable.  
    ● Chris Shaw succeeded Mascarenhas and built systems and processes to bring 
    stability to the growing organizations. 
    ● Rajiv Gulati became managing director in 1999. He enlarged the staff even 
    further, to correspond the growing company and created a medical and 
    regulatory unit to handle the product approval processes with the 
    government. At the end of 1999 it went through a number of reforms, which 
    brought the Eli Lilly the challenge to review and assess its current strategy.  
     
    3. How would you assess the overall performance of the JV? What did the partners 
    learn from the JV? 
    I think overall performance of the JV was good. The JV 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 
    that Eli Lilly gained through cooperation with Ranbaxy. 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 actions would you recommend regarding the Ranbaxy partnership? What are 
    the implications of your recommendation? How would you implement this? 
    The two companies despite their successful venture had different focuses, 
    Eli Lilly was focused on innovation and discovery while Ranbaxy was concentrated 
    on generics. Now that they grew and matured they could proceed on their own and 
    concentrate on their own core activities and have full control over the decision 
    making.  
    Ranbaxy was experiencing cash flow difficulties due to its network of 
    internationals sales. Selling it share would help improve its financial situation. Eli 
    Lilly did not launch some of its products due to weak intellectual property in the JV 
    times and because it did not want to give it away to the Indian companies. Now it 
    could do so and do it alone since the new Indian law allows 100% foreign capital 
    firms and the new entities would be granted product patent recognition. Being a 
    global brand, Eli Lilly did not want local manufacturing during the JV times, now 
    with the new price control and patent protection it can introduce its products to the 
    Indian market.  
     
     

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