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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Challenging American Pharma Companies Contd...

If Ranbaxy was successful in proving both the patents invalid, the generic version of the drug could be introduced by 2007. The above dispute made headlines in the US media. Ranbaxy, an unknown entity for most of the US public, was competing with leading US pharma companies head-on. In 2002, Ranbaxy Pharma US had challenged GlaxoSmithkline by introducing its generic version of antibiotic called Ceftin in the US markets. GlaxoSmithkline took it to court, alleging patent infringement by Ranbaxy. The final verdict in April 2004 declared that Glaxo's patent had not been infringed. With the success of Ceftin, Ranbaxy's revenues in the US rose to US$ 407 million in 2003 from US$ 290 million in 2002.

Ranbaxy's foray into international markets began when it started exporting bulk drugs in 1975. Over three decades, Ranbaxy's international businesses grew strongly. By February 2004, the company's sales crossed the US$ 1 billion milestone, with international sales accounting for more than 50% of total sales. Ranbaxy's export revenues grew from 8% of its total revenues in 1983, to 38% of its total revenues in 1994. Commenting on Ranbaxy, Paul Thomas, Managing Editor of PharmaManufacturing.com said, "Ranbaxy is challenging the notion that an Indian company must be dependent upon low-wage workers, a maker of generics rather than branded drugs, an imitator rather than innovator, an adversary of Big Pharma."9

Background Note

Ranjit Singh and Dr. Gurbax Singh, distributors of vitamins and anti-tuberculosis drugs for a Japanese pharmaceutical company, founded Ranbaxy in 1937 in Amritsar, Punjab. Initially, it was only a distributor. In 1951, Ranbaxy took on distribution for an Italian pharma company - Lapetit. In the same year, Bhai Mohan Singh joined the company as a partner.

The company's first manufacturing plant was established with assistance from Lapetit in 1961. Ranbaxy was interested in importing bulk pharmaceuticals and carrying out formulation and packaging, but Lapetit was interested in exporting completely packaged products. In 1966, Lapetit decided to break the joint venture, and this forced Ranbaxy to develop its own brands. By 1969, Ranbaxy was able to replace all of Lapetit's brands with its own brands through reverse engineering.10 Bhai Mohan Singh's son Dr. Parvinder Singh (Parvinder) completed his PhD in pharmacology from the US and returned to India to join his father's business in 1967. He put in strong efforts to make Ranbaxy a technologically superior company...

Excerpts >>

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9] Thomas, Paul, "Therapeutic Dose: Riding the Indian Wave," July 21, 2005.

10] India followed the process patent system till January 2005, under which, a company could produce and sell drugs discovered by other companies, by altering the drug production process.

 

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