Ranbaxy's Globalization Strategies and its Foray Into the US

            
 
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Case Details:

Case Code : BSTR188
Case Length : 17 Pages
Period : 1995-2005
Organization : Ranbaxy Laboratories Limited Plc.
Pub Date : 2005
Teaching Note :Not Available
Countries : US, India
Industry : Pharma

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.



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Ranbaxy in the US

Ranbaxy entered the US in 1993-94 with its 100% subsidiary - Ranbaxy Pharmaceuticals Inc. The company managed its operations with a small team for a period of four years. The team worked to gain understanding of the market and what the company would need to do to gain a foothold in the market, gaining in-depth knowledge about FDA approvals, regulatory processes and the functioning of American markets.

The company concentrated on developing its own infrastructure in the US rather than depending on its partners. Emerging opportunities in the US generic markets were used by Ranbaxy as its launch pad for establishing operations in the country. Between 1995 and 1998, the company filed 16 abbreviated new drug applications (ANDA). The company acquired Ohm Labs, a generics company with experience in FDA approvals and formulations, in 1997.

This helped form a base for Ranbaxy's foray into the US generics market. In 1998, Ranbaxy started marketing its products. In fiscal 1998, Ranbaxy's US operations incurred annualized losses of US$ 2.5 billion...

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The Road Ahead

Till early 2005, India recognized only process patents. This changed to product patents from January 2005. Several multinational pharmaceutical companies were waiting for this to happen. The product patent regime was projected to have an adverse impact on small pharma manufacturers in India, who did not possess the required capabilities to launch new products.

However, large Indian pharma companies were gearing up to face the threat from multinationals and they were making high investments in R&D activities. With import tariffs also coming down, Indian players faced increasing competition from cheap imports too. According to McKinsey, the Indian pharmaceutical industry would grow to US$ 25 billion by the year 2010. Indian pharma companies in general, and Ranbaxy in particular, had several advantages. They had a large talent pool of pharma scientists and their costs were low. Ranbaxy had several active pharmaceutical ingredients (APIs) that were available at low cost. Costs played an important role in the generics market, as the products were differentiated only by cost...

Exhibits

Exhibit I: Patent Protected and Generic Drug Firms
Exhibit II: Ranbaxy - Presence in Global Markets
Exhibit III: Abbreviated New Drug Application and Para Filings
Exhibit IV: Opportunities for Indian Pharma Companies in the US


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