The question is whether to seek another partner or to buy out the company. One of the benefits of the JV has been the Ranbaxy distribution network. Using another Indian partner would mean a change in this network, and that could compromise earnings potential because as the largest pharmaceutical company in India Ranbaxy has the best distribution network. In addition, there are cultural considerations -- other Indian companies may have difficulty dealing with the ethical standards of the joint venture. The members of the current JV have been trained in these ethical standards. In addition, Eli Lilly has worked hard to build its own brand name in India and associate that brand with its standards.
Recommendation and Conclusion
It is recommended that Eli Lilly purchase Ranbaxy's share in the subsidiary. There are still options for the two companies to work together, particularly in distribution. Even without...
Eli Lilly entered into a joint venture agreement with Ranbaxy to produce and market pharmaceuticals on the Indian market in the early 1990s. Eight years later, the parties are re-evaluating the venture. Ranbaxy was considering selling its stake and Lilly was unhappy with aspects of the arrangement as and wanted to re-frame it going forward. Eli Lilly brought a number of assets to the deal, including its patents and its
Eli Lilly JV Eli Lilly and Company has maintained a joint venture in India with Ranbaxy Laboratories Limited. Each firm is a leading pharmaceutical company in their respective countries, and though each offer distinctly different cultures, their joint venture has worked well until just recently. India, like many countries, are changing the business marketplace through regulations and stringent standards that make doing business much more difficult, which affects Ranbaxy's cash flow
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