Case study analysis "Eli Lilly in India, Rethinking the Joint Venture Strategy"

Running head: ELI LILLY IN INDIA1
Eli Lilly In India: Rethinking The Joint Venture Strategy: Case Analysis
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ELI LILLY IN INDIA

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Eli Lilly In India: Rethinking The Joint Venture Strategy: Case Analysis
I. Indian Market Entry: Right Strategy for Eli Lilly?
In hindsight, Lilly can be said to be, overall, have adopted a correct strategy to enter Indian market. A US-based company Eli Lilly had substantial reputational, operational and R&D assets making entry into Indian market, favorably receptive of foreign imports and companies, highly likely to succeed. Moreover, upon a joint meeting prior between senior executives in both companies, Eli Lilly identified several commonalities in values in Ranbaxy’s culture. This is particularly important since several joint ventures are highly likely not to be initiated successfully, let alone operate and grow, if corporate cultures and values are drastically different at companies planning a joint venture. Then again, Eli Lilly had additional practical and market-specific reasons to make a decision about an Indian market entry. Specifically, India, projected to have a growing middle class, offered Eli Lilly a potentially lucrative market. Second, India’s changing regulations, particularly adopting patent laws and enabling foreign entities to have full ownership of local subsidiaries, represented a major favorable condition to make staying in Indian market potentially more profitable. Third, local market knowledge and experience provided by Ranbaxy was not only important to help make Indian market entry smooth (e.g., putting into use Ranbaxy’s long-standing government relations to accelerate joint venture foundation and operation matters, usually consuming in India) but, more importantly, to vertically merge drug manufacturing operations at lower cost and for wider distribution networks by relying on Ranbaxy’s expertise in non-patented drugs, a non-core but highly lucrative business line line for Eli Lilly. In India, a possible SWOT for Eli Lilly could be as follows:
Strengths
* Ranbaxy’s compatible corporate culture
* Senior management commitment
* Lack of product and/or business line conflict of interest
ELI LILLY IN INDIA

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Weaknesses
* Lack of succession plans in case one or more key leadership exits for reasons of departure or death
* Lack of long-range strategy about future market penetration in same or different product lines
Opportunities
* Growing Indian middle class
* Favorable regulatory climate
Threats
* Growing local competition
* Greater government control and import duties II. Eli Lilly-Ranbaxy JV: Underlying Reasons
For Ranbaxy, a JV was equally potentially beneficial. First, Eli Lilly offered Ranbaxy a “brand equity” edge necessary to expand into international markets and, for that matter, further penetrate local market. That is, Eli Lilly, a US-based multinational, provided Ranbaxy access to key world-class drug manufacturing standards in addition to company’s well-established market reputation in key international markets. Second, Eli Lilly, one of a few big players not yet in India, offered a...