Features of global industry 4-5
Factors motivate Eli lily and Ranbaxy joint ventureÃ¯Â¼Â
- Success factors of JV
Discussion of Ranbaxy may divest the JV and invest in generics manufacturing business in international market dues to India joint WTO in 1995.
Prospect of future Eli Lilly in India
In 1993 Eli Lilly, one of the leading pharmaceutical firms in the USA, started a joint venture in India with the leading Indian company Ranbaxy. (Bantlett, Ahosal & Beamish, 2008) The decision was dictated by the conditions of the US market and opportunities of the India market. Generally, an international joint venture is a company that is owned by two or more firms of different nationalities. (Paul, 2008) It is the young firm (Eli Lilly) with its entrepreneurial culture and unique design structure provides the advanced technology while the mature corporation (Ranbax) provides capital and marketing services.
Both organizations can mutually benefit from joint venture. (Philip, 1990) As a result, Eli Lilly used Ranbaxy's name for everything, as Eli Lilly were fairly new and it was very difficult for them in India, so they used Ranbaxy's distribution network as their did not have one, and also Eli Lilly did not want to invest in setting up a distribution network in order to save the cost which was very profitable. (Bantlett, Ahosal & Beamish, 2008) However, Costlier manufacturing practices due to strict governmental control, prices of drugs increased dramatically in 1990s, invasion of cheap generics to the USA market as opposed to low costs in India and new regulations that opened Indian market to foreign investments (up to 51%) created tempting condition to enter one of the emerging huge markets of the world. (Bantlett, Ahosal &...