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Eli Lilly Ranbaxy Jv

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Assignment 2 —Eli Lilly in India: Rethinking the Joint Venture Strategy

Executive summary

Eli Lilly entered the Indian market in a joint venture with Ranbaxy, in order to capitalize on increasingly favourable market conditions, low costs and to gain a foothold for entering other Asian markets. This move succeeded because of a commitment to values for the two partners, cooperation and excellent management. Ranbaxy smoothed the way with existing distribution networks, government contacts and local market knowledge. Lilly provided foreign expertise, competent managers and capital. The venture earned both firms significant advances in market share and earnings, and the relationship remained positive throughout.

As the Indian economy has become increasingly liberalized and open to foreign investment, there is great potential in the market. Other foreign firms are entering the market, and as a well-established powerful player in the market Lilly no longer needs to use Ranbaxy as an intermediate. Lilly seeks continued, stable growth in the region and needs to consolidate and refocus its business in niche drugs to remain competitive in a changing global business environment. Ranbaxy wants to move away from generics to become a more internationalized and R&D based company like Lilly, but needs significant cash flow in order to grow abroad. Both firms are considering options for the future.

Problem statement

Eli Lilly-Ranbaxy, a joint venture in India must re-evaluate the direction of their business relationship. Though the partnership has been successful for both firms, multiple variables including a changing industry climate and diverging futures give cause to question whether continuing as partners is the best choice for ELR.

Analysis

The primary problem for Lilly and ELR was the Indian market. Although there was a strong and

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