Eli Lilly and Ranbuxy

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ELI LILLY IN INDIA RETHINKING THE JOINT VENTURE STRATEGY
Abhay Kishore – 01 Abhishek Kunal – 05 Anil Kumar Jadli – 11 J.Harish – 25 Khushal Malik – 28 Sharad Singh – 49

PHARMACEUTICAL INDUSTRY – Global Trend
• • • •
Mainly concentrated in the United States, Europe, and Japan Developing a drug from discovery to launch took 10 to 12 years. Cost of development of drug is between $500-$800 million. Drugs were strictly controlled by government agencies: o o o o

Food and Drug Administration (FDA) – USA, CPMP – Europe
12% 8%

North America Europe 38% 18% Asia Japan

MHW – Japan DPCO & Indian Patent Act - India

• •

Size of industry : USD 960 billion in 2012. Few Firms control entire market (Oligopoly).

24% ROW

• 4 Firms – Control 20% , • 20 Firms – 50-60%, • 50 Firms – 65-75%

PHARMACEUTICAL INDUSTRY – Global Trend

• Covered the chemical substance itself • Offered typically 20 years of protection • Usually a lag time of 1012 years by the time the patent was obtained and the launch date

• Covered the method of processing or manufacturing the product • Very little protection because it was easy to slightly modify the process

Global Issues in Pharma Sector

Prices in of the drugs varied in developed countries • US & Canada by factor 1.2 to 2.5. • Europe by factor 1.1 to 2.5. Parallel Trade: an outside company sells a patented product in a market not designated to sell the drug. o •

Independent firm exploited parallel trade by using the differentials in price across various countries.



Generic Drugs: unbranded drugs of comparable efficacy available at fractional cost of branded product. o o o

Posed as major challenge for pricing power of large pharma companies. No additional expense for drug R&D of new compounds. Generic companies made money by copying the products discovered & developed by other major pharmaceuticals…...

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