Introduction

Eli Lilly is a company who faces the constant challenges of globalization. They operate in a global competition with product development aimed for the world market, not just a local market. This gives Eli Lilly a set of challenges which they need to deal with, in order to be competitive at the world market now and in the future. In a market as the pharmaceutical, research and development is key. Without a constant flow of new patents and products, any pharmaceutical company will suffer the pain of a slow death.

With the entrance on the market in India by creating a joint venture with the local company Ranbaxy, Eli Lilly secured a bridgehead in a fast growing and very exciting market, India. At the time a joint venture with Ranbaxy was probably the only right solution, with the current law and legislation. But now times have changed, and Eli Lilly must consider its current position in India in accordance with overall corporate strategy of this multinational company.

Problem statement

The future of Eli Lilly Ranbaxy and its partners are uncertain as the Indian market has changed. Therefore it is important for Eli Lilly to consider its current position.
This report will try to help creating the best possibilities for Eli Lilly and its overseas activities. So that Eli Lilly will have a bright future. But first it is important to look at the past, in order to make the right strategic decision in the current situation. This is done by answering the following questions:
- Was the Joint Venture decision the right decision?

- How has time changed the basis of the Joint Venture?

- Is a Joint Venture the right solution now, considering these changes?

- What will be best decision for Eli Lilly regarding Eli Lilly Ranbaxy?

- What does the future hold for Eli Lilly?

Joint Ventures

The Eli Lilly Ranbaxy is a joint venture between the American Eli Lilly and the Indian Ranbaxy. This was created because of the market situation in 90’s India. For a joint venture to take place you need 3 basic things to be in order. First you partners who independently agreed that the business opportunity at hand is worth pursuing. This is the case, as Eli Lilly was eager to get into the growing Indian market and Ranbaxy was interested in offering its intermediate products to the American company. Secondly, collaboration is the optimal form, which again is the case with the Eli Lilly Ranbaxy. The American company was one of the only large world-wide players that were not on the Indian market. Furthermore restrictions towards foreign investments in the pharmaceutical sector were limited in India at this time. Eli Lilly was interested in a partner, because of their knowledge towards the local market. Ranbaxy was a perfect fit, because of its size on the local market. At last, internal agreement on these issues must have been obtained by each of the partners. This is also the case with the Eli Lilly Ranbaxy. Therefore the Joint Venture fulfils these basic assumptions for a partnership.

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New markets

India and most of the Asian region, was at that time very interesting for western companies, and it still is today. India with its middle class, estimated to be around 200-300 million people, had a huge market for pharmaceutical products. Furthermore production costs were lower than in the American states. A lot of international pharmaceutical companies were present in India, under the current restrictions, but were having a hard time which forced several of them to close down after only some years in India.

Therefore India was an attractive market for Eli Lilly, and when ...

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