Pharmaceutical Industry Case Study

The Indian pharmaceutical industry enjoys certain advantages, which include low cost of innovation and capital expenditure, and strong domestic support in production, from raw material requirements to finished goods. The competitive structure of the pharmaceutical industry was being redefined due to the threat of new entrants, intense price competition, entry of large players, and new regulations and rules as well as a shift in focus. In addition, the partnerships between pharmaceutical and biotechnology companies were growing rapidly. The global pharmaceutical market is undergoing rapid transformation. There has been a dramatic shift towards emerging markets as western markets slow down.
In terms of the economic environment, although India was characterized by low per capita gross domestic and Indian drug prices were among the lowest in the world, under the leadership of Dr. Monahan Singh, the country began the process of liberalization. This economic reform together with the globalization trend was moving the economy away from import substitution to an export-driven economy. Improvements on the infrastructure, distribution, logistics were aimed at attracting foreign direct investments which was encouraged by increasing the maximum limit of foreign ownership to 51% in the industry. At the same time, increased pressure from shareholders has caused a consolidation of the industry: more mergers and acquisitions will take place over the coming years.
Even though there was a growing middle class with high market potential; poverty still remained as a significant problem. Achieving profitability was not easy for the company since the Indian government imposed duties on imports and other regulatory issues.
The political and legal envi...

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Update to Present
Based on our research on what happened to the firm with the issues of the case, we found that on July 5th Eli Lilly announced that they bought the stakes owned by Ranbaxy for $17 million that includes their brand name and shares.
Today Eli Lilly continues to develop and implement campaigns such as “Lilly Global Health Innovation Campaign” in an effort to help local governments reduce the expansion of diabetes and multi-drug resistant tuberculosis (MDR-TB) among its population by closely monitoring data collection from members and sharing this with local agencies at the global level. The company has partnered with Indian companies to launch generic drugs in India. Eli Lilly continues to innovate and improve insulin products and mechanisms. They recently partnered with Boehringer Ingelheim in India and launched a new insulin product.