PRINCIPLES OF MANAGEMENT

A CASE STUDY ON RANBAXY LABORATORIES LIMITED

submitted by Munkesh kumar B090962ME;batch b ;S5

Ranbaxy Laboratories Limited

Ranbaxy Laboratories Ltd. Was founded in 1961. Dr. Parvinder Singh made a great contribution to Ranbaxy. He joined Ranbaxy in 1967. Ranbaxy began manufacturing formulations in 1962. It went public in 1973. Multipurpose chemical plant was setup for the manufacture of pharmacy products at Mohali in India. Ranbaxy formulated export strategy depending upon on the opportunities in 1975. In 1977, Ranbaxys had its first international joint venture in Lagos (Nigeria). In 1983, a modern dosage forms facility at Dewas (MP) in India was developed. In 1985, Ranbaxy Research Foundation was established. Stan care, Ranbaxys second pharmaceutical marketing division, also started functioning. In 1987, Production started-up at the modern plant at Toansa (Punjab). In 1988, Ranbaxys Toansa plant got US Food and Drug Authority (FDA) approval. In1990, Ranbaxy was granted US patent for Doxycyline In 1992, Ranbaxy Laboratories entered into an agreement with Eli Lilly & Co of USA for setting up a Joint Venture in India to market select Lilly products. In1993, Company setup a Joint Venture in China called Ranbaxy (Guangzhou China) Limited. In 1994, Ranbaxy Laboratories established Regional Headquarters in London (UK) and Raleigh (USA). Ranbaxys Global Depositary Receipts (GDR) got listed in Luxembourg Stock Exchange

In 1995, Ranbaxy Laboratories acquired Ohm Laboratories, a manufacturing facility in the US. And the FDA approved, state-of the art new manufacturing wing, at Ranbaxys US subsidiary Ohm Laboratories Inc., started functioning. In 1999, Bayer AG, Germany and Ranbaxy signed an agreement for `International Strategic Alliance where Bayer obtained exclusive development and worldwide marketing rights to an oral once daily formulation of Ciprofloxacin, originally developed by Ranbaxy . Ranbaxy, at present, has manufacturing operations in more than a dozen countries and its products are available in over 125 countries. The company has an expanding international portfolio of alliances, joint ventures and representative offices across the globe with a presence in top markets of the world such as USA, Japan, China, Mexico, Canada, Brazil and South Africa. Similarly it has a presence in 22 of the 25 European Union Countries including Germany, France, Italy, UK, and Spain. Ranbaxy, at present, has manufacturing operations in more than a dozen countries and its products are available in over 125 countries. The company has an expanding international portfolio of alliances, joint ventures and representative offices across the globe with a presence in top markets of the world such as USA, Japan, China, Mexico, Canada, Brazil and South Africa. Similarly it has a presence in 22 of the 25 European Union Countries including Germany, France, Italy, UK, and Spain

Repositioning strategy steps taken up in 1992:Change in export mindset. Sticking to its core area of pharmaceuticals. Internationalization. Research based company discovering its own innovative drugs Yes , that repositioning helped Ranbaxy in establishing the companys image & name in international market; not only as a fastest emerging & sales record breaking company, as a joint venture in China, US, UK & other parts of globe but also as an authentic international company of innovative researched based drugs with patents & IPR (Intellectual Property Rights) Joint Venture:- in 1992 with Eli Lily Corporation of USA. In 1993 with Guangzhou China in China. In 2005 with Nippon Chemiphar in Japan. Acquisition:- In 1995 acquired Ohm Laboratories of US. In 2000 acquired Bayers Generic Business in Germany. In 2004 acquired RPG (Aventis) of South Africa. In 2005 acquired EFARMES of Spain. In 2006 acquired Allen a division of Glaxo Smith Cline in Italy. In the same year acquired 96.7% of Terapia from Advent International. Ethimed of Belgium & Mundogen of GlaxoSmithKline in Spain.

Subsidiary :- headquarters in UK, US. In 2001 in Vietnam new manufacturing plant. Launched its POC Phase-2 studies in Canada in 2005. Opened third state of art R&D in Gurgaon on NCE discovery research. To create an image as an international pharmacy company of India with highquality pharma production with IPR. Signing an agreement in 1992 with Bayer AG, Germany for International Strategic Alliance Ranbaxys basic strategy was to market its product globally with that strong brand name. Later on, acquiring Bayers generic business in Germany Ranbaxy become the largest pharma company in South America with an achievement of US$ 2.5 million sales globally. With Eli Lily it started because they wants to improve Indian pharma image globally. And also the want to expand their business internationally. This joint venture gave them exposure in global market and a chance for development in international pharmaceutical industry. Yes, because by getting IPR Ranbaxy developed as an international brand. Ranbaxy has taken it as challenge & made overseas expansion strategy. Thus become the fastest growing company globally. They do expansion across the world and made their brand name in globe. Their market entry strategies in global context were helpful for better image and in building a strong brand.

Question. What kind of repositioning strategic steps were taken up in 1992 by Ranbaxy management? Do you think that repositioning helped Ranbaxy? Answer DEFINING REPOSITIONING Changing a brand's status in comparison to that of the competing brands. Repositioning is effected usually through changing the marketing mix in response to changes in the market place , or due to a failure to reach the brand's marketing objectives. STEPSTAKEN Ranbaxy had repositioned itself in 1 992 and the following changes were done in the organization to make internalization a success: 1.Bringing a change in the exports mind set was the first major step taken; 2.In 1992 , 6 to 8 months were spent studying what Ranbaxy laboratories really wanted to be. Three elements emerged under this i.First , Ranbaxy decided that the company will not look in to diversification into unrelated or even related areas and it will stick to its core area of pharmaceuticals; ii.Second , it stated its intent to be an international company.This implied a focused & rapid expansion into foreign countries. iii.It clarified it will be a research based company, which meant that it will discover its own proprietary innovative drugs, to leverage in the era of world wide intellectual property rights.

CONCLUSION REPOSITIONING helped Ranbaxy to clearly define its long term goals and formulate strategies to achieve those goals ; majorly Internationalisation ,and work accordingly . It provided a basic framework to whole of the organisation and to all levels of management so that there is no scope of conflict regarding the basic objective of the company. conclusion is based on these points: 1. In 1992, Ranbaxy laboratories entered into agreement with ELI LILLY & CO, of USA; 2. In 1994, Ranbaxy Laboratories established Regional Headquarters in London (UK) and Raleigh (USA); 3. In 1995, Ranbaxy Laboratories acquired Ohm Laboratories, a manufacturing facility in the US; 4. In 1997, Ranbaxy Laboratories crossed a sales turnover of Rs 10,000 million, with its exports reaching an all time high of Rs 5,000 million; 5. In 2000, Ranbaxy acquired Bayers generics business in Germany; 6. In 2001 also, it set up a new manufacturing facility in Vietnam; 7. In2003,RanbaxyreceivetheECONOMIC TIMES AWARD for CORPORATE EXCELLENCE;

8.In 2004, Ranbaxy began operations in FRANCE as a generic company; 9.In 2005, Ranbaxy ANTI MALIRIAL MOLECULE successfully completed POC phase II studies.
QUESTION 2: Discuss the global market entry modes chosen by Ranbaxy to grow as an Indian multinational Answer : Well there are different entry modes to enter into global market like: Exporting/Importing Franchising Licensing Joint ventures Strategic alliances wholly owned subsidiary Mergers/acquisitions counter trade Foreign direct investment/ foreign institutional investors RANBAXY chose the following strategies to enter into global market: EXPORTING Which is selling goods and services produced in home country to other markets

JOINT VENTURE Where in two or more "parent companies agree to share capital, technology, human resources, risks and rewards in a formation of a new entity under shared control
STRATEGIC ALLIANCE Which is a formal relationship between two or more parties to pursue a set of agreed upon goals or to meet a critical business need while remaining independent organizations ACQUSITION Which is a corporate action in which a company buys most, if not all,of the target company's ownerships takes in order to assume control of the target firm

ADVANTAGES OF DIFFERENT STRATEGIES CHOOSEN BY RANBAXYADVANTAGES OF DIFFERENT STRATEGIES CHOOSEN BY RANBAXY EXPORTING enhance domestic competitiveness increase sales and profits gain global market share exploit corporate technology and know-how extend the sales potential of existing products stabilize seasonal market fluctuations enhance potential for corporate expansion sell excess production capacity gain information about foreign competition JOINT VENTUREJOINT VENTURE speed Access Sharing of resources Leveraging of underutilized resources High profits Back end income Low or no risk opportunities and massive leverage

STRATEGIC ALLIANCE mproved Cash Flow I educed Overhead R mproved Access to Capital I btain Capital O redibility C ccess to Facilities and Technology A ccess to Expertise A bility to Keep the Company Small A ore Products to Sell M nnovative Products I reative People C peed and Flexibility in Delivering New Products S ACQUISITION Economies of scale,which reduces unit costs Greater market share for horizontal integration, which means the business can often charge higher prices Spreads risks if products different Reduces competition if arival is taken over Other businesses can bring new skills and specialist departments to the business It is easier to raise money if a larger business

QUESTION3 :Why did Ranbaxy enter into International strategic alliances with ELI LILLY Coof USAand BAYER A G of GERMANY? ANSWER: DEFINING INTERNATIONAL STARTEGIC ALLIANCE Formal relationship between two or more parties to pursue a set of a greed upon Goals or to meet a critical business need while remaining independent organizations; Ranbaxy entered in to strategic alliance with ELI LILLY just to Market some of the selected products of Eli Lilly More over it can be understood that Ranbaxy would be expecting to Grow its market share in USA with the help of Eli Lilly innear future Ranbaxy entered into strategic alliance with Bayer AG just to market their products by BAYER AG globally, where BAYER A G obtained exclusive development & world wide marketing rights to an oral once daily formulation of CIPROFLOXACIN, which was originally developed by Ranbaxy;

QUESTION 4:Discuss the acquisition strategy of Ranbaxy under the leadership Of Mr MALVINDER SINGH? Answer:-MR MALVINDER SINGH the MANAGING DIRECTOR & CEO followed the AGGRESSIVE OVER SEAS ACQUSITION STRATEGY for expansion instead of growth through organic rule Ranbaxy Laboratories is the most aggressive over seas acquirer from Indian pharmaceutical sector with 11 acquisition deals spread across 10 countries

FOLLOWING WERE SOME OF THE STARTEGIES: MARCH21,2006: Ranbaxys US arm buys patents, trademarks, and automated manufacturing equipment from Senetek MARCH27,2006: Ranbaxys Italian subsidiary acquires the unbranded generic Business of ALLEN, a division of GLAXOSMITHKLINE to complement its own pipe line for the Italian market MARCH29,2006 Ranbaxy acquired 96.7 % of ROMANIAN drugmaker TERAPIA from ADVENT INTERNATIONAL; MARCH30,2006: Ranbaxy acquired generics company ETHIMED,a top 10 playerin Belgium; JUNE18,2006: Ranbaxys Spanish subsidiary purchased the mundogen generics business of GLAXOSMITHKLINE in Spain

Refernces used

http://www.ranbaxy.com/investorinformation/events.aspx http://en.wikipedia.org/wiki/Market_entry_strategy Harold koontz Heinz weihrich