Was the Country Wrong? Why India?

1. Was the country wrong? Why India?

In my opinion, the country is right, because India has a very large population, in 1990 India's population reached 800 million. Even though in 1990 figures for per capita annual expenditure on drugs in India were estimated at US$3, which is much fewer than developed country. However, the total expenditure on drugs in India was still 2 billion and 400 million dollars. This huge number represented a very potential market in India. In addition, the dawn of the 1990s saw India initiating economic reform and embracing globalization. Foreign direct investment was encouraged by increasing the maximum limit of foreign ownership to 51 percent in the drugs and pharmaceutical industry. These two reasons in 1990 indicate that India is a good choice to invest.

2. Was deciding to partner wrong? Is partnership a good or bad thing?

Actually，partnership is a good thing for Lilly company to enter India market. On the one hand, some resistance was met due to the recognition that a lot of Lilly's products were already being sold by Indian manufacturers due to the lack of patent protection. On the other hand, Lilly was a name that most physicians in India did not recognize despite its leadership position in the United States. The joint venture will help Lilly's product increase recognition. Secondly, Eli Lilly Ranbaxy sounded foreign enough for Indian people, in that period, where "good quality" rightly or wrongly, was associated with foreign imported goods. Thirdly, joint venture always takes some advantages and tax benefit provided by local government.

3. Was the partner choice wrong?

The partner choice is right. Firstly, Ranbaxy was the leader within India while Lilly is still unfamiliar brand for Indian people. In that case, Ranbaxy will enhance the recognition for Lilly. Secondly, with Ranbaxy's help, it is getting easy for Lilly getting government approvals, licenses, distribution and supplies. Thirdly, Lilly could leverage distribution network that Ranbaxy established and Lilly did not want to invest heavily in setting up a distribution network.

4.Was the JV structure wrong?

The JV structure was right, because an initial subscribed equity capital of Rs84 million (US$3 million), with equal contribution from Lilly and Ranbaxy, leading to an equity ownership of 50 percent each. Meanwhile, the board of directors for the JV would comprise six directors, three from each company. A management committee was also created comprising two directors, one from each company, In that case, both parties make equal contribution and take equal responsibilities, so they could supervise each other, and this kind of 50% to 50% structure in favor of long term development of VJ.

5.Was the JV leadership wrong?

The JV leadership was right, from March 1993, Andrew Mascarenhas, an American citizen of Indian origin assigned as managing director of the joint venture. Rajiv Gulati was response for marketing and sales at the JV. These two people collaborate closely. They both

...