Eli Lilly Case - Memo - Rethinking the Joint Venture Strategy

Eli Lilly

Memo

To: Dr. Charles Dhanaraj

From: Vinh Thai

Date: 9 November 2011

Subject: Rethinking the Joint Venture Strategy

Issues: In 1980s, many pharmaceuticals companies had entered Indian market, but Eli Lilly did not have a presence in India. In 1992, Eli Lilly’s decision to enter Indian market was right strategy. At that time, there were 800 million people in India, so Lilly could expand the potential opportunities and got profits. In addition, foreign direct investment was encouraged by increasing the maximum limit of foreign ownership to 51 percent in the drugs and pharmaceutical industry. Eli Lilly’s deciding to partner was not wrong since its partner, Ranbaxy, could help Eli Lilly to get government approvals, licenses, distribution network, culture understanding, and many other advantages. However, there were challenge ahead for Eli Lilly, how to evaluate the options plan for the joint venture strategy.

Discussion of Recommendations: Eli Lilly needs to carefully consider the evolution of the joint venture with Ranbaxy. This joint venture has evolved right from selecting partnership, similar thought leadership, and without losing competitive advantage of each side. The joint venture has found many different ways to maintain competitive advantage for each company and increase awareness. There were numbers of challenges involved in the joint venture strategy such as escalating R&D costs, lengthening development and approval times for new products, growing competition from generics, and rising cost-containment pressures. This partnership realized the challenges and put effort to help Eli Lilly.

Recommendations & Implementation: The joint venture was successful due to the alignment and either side gained