Was the Country Wrong? Why India
Autor: jingjingzhang • May 6, 2015 • Case Study • 482 Words (2 Pages) • 1,023 Views
- Was the country wrong? Why India?
No, I think the country decision was right. Because India is a developing country and India have a large number of populations. Also, in 1990s, the government changed their policy, they welcomed foreign direct investment, make the limit of foreign ownership to 51%(from 40%) in the drugs and pharmaceutical industry. And the average cost in drug is less than other country. So if Eli Lilly wants to expand overseas market, India is a good choice.
- Was deciding to partner wrong? Is partnership a good or bad thing?
I think the partner decision is not wrong and the partnership is a good thing for both companies. If Eli Lily want to enter a new market, build a partner with local company is much easier than itself. It can use partnership company’s existing resources and technology to expand Indian market, such as: government relations and local people’s recognition. And partnership can reduce their risk for both companies.
- Was the partner choice wrong?
I think the partnership with Ranbaxy was correct. Ranbaxy is a research- oriented company just like Eli Lily. Both of them have same common corporate culture. In the 1990s, Ranbaxy was the second largest manufacturing firm of bulk drugs and generics with domestic market share of 15% in India with established distribution network and the second largest exporter to different countries. Therefore, Eli Lilly didn’t need to spend money to build the distribution network. So build a partnership with Ranbaxy was the best choice in India.
- Was the JV structure wrong?
No, the JV structure wasn’t wrong.
Lilly and Ranbaxy have equal equity ownership (50 percent) ownership, it was good for both of them. And in the JV, each company had 3 directors for the board of directors and one director for the management committee. So the JV is fair. And in this case, we can see clearly from the financial information this structure worked very well.
- Was the JV leadership wrong?
No, the JV leadership wasn’t wrong.
Eli Lilly was a good experienced company in the USA, and Ranbaxy also was a top company in the India. Thus, the different companies have the different roles in this case. Eli Lilly hold the power to appoint CEO and the agreement is also provided for transfer of shares. Therefore, the JV leadership is good for two companies and decreases the conflict of them
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