Eli Lilly – Ranbaxy Case Project

Establishing an international joint venture can result in substantial gains but can also result in great costs. Joint ventures between companies in different countries can enhance the companies’ experience in the global business market. It can be a potential gateway to possible business deals and endeavors for future profits. Though there are many benefits in establishing an international joint venture it can come with many stipulations. If a company does not do the research or evaluate all possibilities that come with an IJV, it could lead to potential losses. Eli Lilly Ranbaxy is an example of a joint venture that was pursued with the right strategy, which was a result due to a changing US pharmaceutical market and a rapidly expanding India market.
The two companies in this IJV were both significant players within their home countries, Eli Lilly and Company in the US and Ranbaxy Laboratories Limited from India. When the possibility of establishing a joint venture was approached in 1992, the Indian market for pharmaceuticals was becoming more open to foreign direct investment. Also India at the time was putting a limit on the amount of foreign ownership, from 40 percent to 51 percent, creating less foreign competition in the region. With numerous of opportunities opening up within the Indian market, Eli Lilly saw this as a stepping-stone for future clinical testing. Both companies having common backgrounds and goals of being a research oriented international pharmaceutical company, embarking on a joint venture seemed ideal.
Eli Lilly would establish a presence in the region and gain access to the distribution network enjoyed by Ranbaxy. Furthermore, this JV would result in lower costs in production as well as basic research, which are considerable factors in their broad strategy. The evolution of the international joint venture was strategically handled with early success, starting off with the name of the company, Eli Lilly Ranbaxy; it was strategically named