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Case 6-3

Chapter 6 Case Study Questions

1. Was the country wrong? Why India?

I think it was not the wrong country to invest to achieve globalization market. Eli
Lilly cooperated with Ranbaxy for a joint venture (JV) in India for some
advantages. First of all, at this time, India was a country of 800 million people
that included 200 million to 300 million people were within the country’s middle
class that represented the future of India. It also means it is possible for them to
purchases foreign medicines with higher prices and higher quality than others
local medicines. Second, India has borders with China and Russia where Eli Lilly
intends to expand into. Third, Eli found that Ranbaxy was the potential
pharmaceutical company in the India that was managed by a visionary leader – Dr
Singh. Finally, Eli Lilly’s products were being used by Indian, which means its
brand was known in India.
2. Was deciding to partner wrong? Is partnership a good or bad thing?
It was not wrong to decide to be partner with Ranbaxy. In order to start up a
business in foreign countries, especially in developing countries where people
have low incomes and knowledge, the company should find a partner that is a
local company to introduce their products to customers. Like Lilly in this case,
even though Eli Lilly was well-known in the United States, there was not
recognized by Indian. It was very new brand name for them to accept and try to
purchase, especially in pharmaceutical field. Thus, choosing a partner to be alone
with is not only helpful to develop the business but also reduce the cost to invest
marketing in the new market.
Also, partnership is not always a good thing or bad thing because it depends on
the agreements between those companies. If they have same ideas and
development to achieve, they can support each other to improve the business. In
contrast, when each company tries to reach their own target or go alone with their
strategies, they will increase conflicts between their relationships. They, hence,
might break up their joint and hurt the partner’s business.
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3. Was the partner choice wrong?

In my opinion, Eli Lilly chose Ranbaxy be a partner that is not wrong. While Eli
Lilly wanted to expand their business in India and their products were not known
by Indian, Ranbaxy grew to become India’s largest manufacturer of bulk drugs
and generic drugs, with a domestic market share of 15 percent. Also, Ranbaxy’s
capital costs were typically 50% to 75% lower than those of comparable U.S
plants. Furthermore, Ranbaxy had an alignment of the broad values and could
become an innovation driven company under Dr. Singh leader. In particularly,
both companies had a lot in common. They both believed that they should
develop in high ethical standards, in technology and innovation as well as
patented products in India.
4. Was the JV structure wrong?
The JV structure was right by setting up their board management with equally
members of each company. In order to solve the problem that is the employee
turnover in Indian pharmaceutical industry was very high, the ELR used the
programs were customized for Indian conditions, but retained Lilly’s value. Also,
the structure remains without Ranbaxy versus Lilly politics.
5. Was the JV leadership wrong?
I think the JV leadership was not wrong. The first manager – Mascarenhas- was
successful in building the JV’s team and positing the JV in the India market. Also,
he tried to enlarge his staff when the employee problem occurred in India. Under
his controlled, the JV reached the break-even and was becoming profitable.
Another leader of JV was successful was Chris Shaw. He focused on building
systems and processes to bring stability to the fast-growing organization. Also, He
was right to hire a senior level manager and created a team to develop standard
operating procedures for ensuring smooth operations. Moreover, the product line
also expanded by him. Finally, Gulati who was an managing director lead ELR
created a medical and regulatory units, which handled the product approval
processes with government. As the result, the venture was an excellent growth
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rate in 2001, surpassing the average growth rate in the Indian pharmaceutical
industry.
Since the changes of government in regulations and environments, the JV had
negative impacts on it. It made ELR have to face to solve these challenges and
adopt to the new changes.

6. What was the final outcome of the JV?

The final outcome of the JV is both companies were successful. The JV did add
some prestige to Ranbaxy’s efforts as a global player as the Lilly name had
enormous credibility while Lilly gained the toehold in India. Also, during 1990s,
they did not have any cannibalization of each other’s employees, quite a rare even
if compared with the other JVs. Furthermore, the JV was successful to have a
large durable organization and prepare them to go from sales of US$10 million to
sales of US$100 million.