Ranbaxy Case Project Essay

Eli Lilly Ranbaxy is an example of a pin danger that was pursued with the rectify st enume markgy, which was a result due to a changing US pharmaceutical mart and a rapidly expanding India commercialise. The deuce companies in this IJV were some(prenominal) solid players at bottom their home countries, Eli Lilly and Company in the US and Ranbaxy Laboratories Limited from India. When the opening move of fixing a joint profess was approached in 1992, the Indian market for pharmaceuticals was adequate more open to overseas direct investment. in addition India at the duration was putting a limit on the amount of foreign ownership, from 40 percent to 51 percent, creating less foreign competition in the contri preciselyion. With legion(predicate) of opportunities opening up inside the Indian market, Eli Lilly saw this as a stepping-stone for forthcoming clinical testing. Both companies having common backgrounds and goals of creation a look into oriented international ph armaceutical caller, embarking on a joint casualty seemed ideal. Eli Lilly would establish a presence in the region and gain advance to the distribution ne bothrk enjoyed by Ranbaxy.Furthermore, this JV would result in deject costs in production as well as raw material research, which are considerable factors in their broad strategy. The evolution of the international joint post was strategically handled with early succeeder, starting off with the name of the company, Eli Lilly Ranbaxy it was strategically named for future success within the region. Mascarenhas stated, The reason for this was based on my anterior intimacy in India, where good quality rightly or wrongly, was associated with foreign imported goods.Eli Lilly Ranbaxy sounded foreign enough With Ranbaxy being the largest manufacturer of bulk pharmaceuticals in India, and with a domestic market share of 15 percent, they provided the knowledge infallible for the local market and helped establish a name in the r egion for Lilly. Mascarenhas and Gulati had a good working and personal relationship they had good mutually beneficial communication, which was a crucial factor in the JV fulfillation and because Ranbaxy provided Eli Lilly with leisurely entrance and networks to the Indian market.After the establishment of the joint venture the two companies focused on creating an organization where in that location was strong support from both sides. Many employees had an opportunity to establish a legitimate career within the Eli Lilly Ranbaxy Corporation. Indeed, this was refreshing considering the high turnover rate within the industry, where the union served as a crutch. Within a year later building the infrastructure from the ground up, the JV was able to launch unlike products and had more than two hundred employees.The joint venture provided product and merchandising strategies, in which they employed happy corporate social responsibility of providing the physicians with relevant med ical information Ranbaxy and Lilly were two companies that were no-hit in establishing a joint venture because they had a distribute of the same common value. They both had high ethical standards, when presenting their products to doctors within the market they would answer all questions correctly and to the best of their knowledge.Since their products were not known within the local market, Eli Lilly used a strong sense of honesty called the trigger-happy book value, with local doctors and began to gain their respect and trust. Andrew Mascarenhas, from Eli Lilly and Company was the showtime successful managing director for the joint venture. Throughout his tenure he helped work out and build the joint venture from the ground up. With a driven opening move and was responsible for the hiring of the gross sales force and recruitment of medical doctors.As a hinter, Mascarenhas was set about with unique challenges he had to deal with cash execute constraints, limitations on pri cing and other government regulations. Also within the Indian market there was low recognition and high turnover rates for sales jobs. Mascarenhas and his team had to strategize on how to appeal to a wider range of employees with future opportunities amongst the company. Eli Lilly Ranbaxy invested in a training program. The program was created for the employees to hold strong values for the positions they were hired for and the positions were customized to Indian standards.Mascarenhas brought Eli Lillys values to the joint venture he was instrumental in the training program and made sure those values were shared. When Mascarenhas was promoted in 1996, the unexampled managing director was Chris Shaw. Having a signifi puket background in operations, Shaw helped the company focus on establishing stability through new systems and processes. He expanded the product line and organized a team to halt sure there were standard operating procedures (SOPs). These procedures would help the j oint venture maintain a productive flow. Aided by his knowledge in marketing, the JV saw an improved growth in sales.Rajiv Gulati was shortly promoted after Chris Shaw. Already having history with the joint venture Gulati was initially the director of marketing and sales. He saw his time as the director an opportunity for growth, which was achieved by implementing medical and regulatory units which helped the company exceed the average growth rate in the Indian pharmaceutical industry. One of the challenges faced by Gulati was Lillys name was not commonly known amongst doctors in the market. Gulati and his team came up with the idea of using Ranbaxys name to lead as a foot in the door, and helped the company gain brand recognition.Also Gulati faced the challenge of trying to distribute a product that was already being sold amongst manufacturers. Through marketing and establishing trust with the doctors the company was able to establish their presence in India. The initial start up o f the joint venture was faced with constant challenges, many in the form of government regulations but because of the functional working relationships between Mascarenhas and Gulati, the JV reached their break-even point in 1996 and concisely realized profitability. With the growth of the pharmaceutical market the company also went through significant changes to go along up with innovations.New managers were introduced during the course of these changes and launched multiple new successful units, which saw a steady annual growth rate of 8 percent. The joint venture also became the worlds twelfth leading pharmaceutical supplier in over 150 countries by 2001, and continuously developed new drugs through extensive research and development. general the performance of the IJV was a success. Each company learned from the joint venture that marketing network was important to have in stray to precede the market in India.They also learned the importance of unmingled fortress and how m uch a role the government can play in the protecting that proprietary knowledge. A patent is needed in order to price their products, and to protect their innovation for a certain time. When they learned the patent laws changed in India, it encouraged them to establish a joint venture there. The live on brought about by the international joint venture helped both companies raise its overall market line and its potency of innovation and discovery.Eli Lilly and Company gained experience in the market perspective of Asian countries while establishing India as their hub. Also they gained significant experience in how to introduce their products within a market where they were not commonly known. Overall Eli Lilly Ranbaxy gained vital cooperation and communication amongst each other. Establishing a very accessible management staff contributed to the early on success of the joint venture. The commonality of the two companies also created ease within the company and earmarked the compa ny to grow in profits and outputs without any disruption or disagreements.Though the two companies have established a very successful lucrative company amongst the pharmaceutical industry the action that would be extraneous to do is to establish a 100% wholly possess ancillary for Eli Lilly. The main reason for the they separation, is that each company started to focus on different objectives when the industry started to grow, Ranbaxy focusing on generics and Lilly focusing on research and development. To implement this action Eli Lilly would have to buy out Ranbaxys stake within the company.With Indian regulations favoring towards a more foreign owned market, this strategy would allow Eli Lilly total ownership and control over their present and future products specifically because of enhanced patent protection for the pharmaceutical industry. Though this is action could lead to probable profits in research and development for Lilly, the implications of these actions could come with potential losses, not factoring in the cost of the buyout. If the IJV were to break apart there is no clear explanation on the future financial outlooks of their company.Furthermore, it can create an unforeseen competition. However, it would allow each company to focus on their own agendas and it would also inject much needed cash flow for Ranbaxy and allow them to concentrate on the generic market. In order keep up with success a company must keep up with the market, and the market was clearly leading Lilly into the path of a fully owned subsidiary. There are risks associated with this but because the JV was already in such a strong position and aided by the new laws, the potential profits of this action is well worth the consideration.