Eli Lilly and Ranbaxy

The changing environment brought the challenge to the two leading pharmaceutical companies, Eli Lilly and Ranbaxy, to review and re-evaluate their joint venture alliance.

The two companies, despite their successful venture, had different focuses. Eli Lilly was focused on innovation & discovery while Ranbaxy was concentrated on generics. Now that they grew and mature they could proceed on their own and concentrate on their core activities and have a full control over decision making. Besides, 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. 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 (to receal its secrets). Now it could do so, and do it alone, since the new Indian law allowed 100% foreign capital firms, and the new entities would be granted product patent recognition. Being global price brand Eli Lilly did not want local manufacturing during the JV time, now with new price control and patent protection it can introduce its products to the Indian market.

No. Firstly Lilly had the technologies of high-end products and Ranbaxy held the dominated position and market share of low-end and traditional products in Indian market. Secondly, Lilly was good at managing, because of their concept of management.

The new regulations allowed Lilly to operate as a wholly-owned subsidiary in India. The government release for foreign company, so Lilly doesn’t need Ranbaxy help anymore.