Strategic alliances by big Indian pharma gies

Dear readers,
Ranbaxy which is one of the topmost pharmaceutical company in India was in the news papers frequently very recently. Ranbaxy making strategic alliances with some other pharmaceutical companies was the back of those news. As you know Ranbaxy is a company which is focusing much on strategic alliances with good insight in the corporate strategies. With reference to some of the news came in dailies like Times of India and The Economic times I would like to mention about some of the strategic alliances came very recently in Indian pharma sector.

In the last month the news was on the strategic alliance made between Ranbaxy and Orchid pharmaceuticals. As per this alliance, Orchid would manufacture both finished dosage formulations, and active pharmaceutical ingredients (APIs) for marketing by Ranbaxy. Orchid is niche player in the global pharma industry with an impressive track record with lot of sterile products. Cephalosporins are the main products of Orchid (fifth rank in global cephalosporins production).

Relations between Ranbaxy and Orchid are not very cordial, and Orchid will feel that it has been pushed to a corner. Ranbaxy is expected to keep quiet for some time, but there are enough reasons to believe that it will prefer to gain control over the Chennai-based company i.e. Orchid in the medium-term. This may be the first step to acquire one of the emerging pharmaceutical company in India by Ranbaxy.

Now, Ranbaxy decided to make a strategic alliance with Merck, one of the global pharma giant for the drug development and research in a collaborative manner. Earlier it had made a contract with GSK also in the same stream. It is assumed that Ranbaxy will make revenue of over 50 million dollars from the alliance with Merck. Just like Ranbaxy, many Indian big pharmaceutical gies like Dr Reddy’s Lab, Nicholas Piramel followed the same path to make alliances in the R&D sector. The main reason for this attitude of the Indian companies is that these companies are aware of the fact that they had to go long way in R&D to sustain in the field.

Recently Nicholas Piramel also had a deal with same Merck to discover and develop cancer drugs which may bring them a revenue of about 350 million dollars! Nicholas has also signed with Eli Lilly for the drugs targeting metabolic disorders, where it could receive 100 million dollars in royalty payments. By seeing the huge figures we can understand the importance of strategic alliances in the Indian pharma business.

Mergers and Acquisitions are also a major part of the corporate strategies practiced by the Indian pharma firms. Don’t forget about the three acquisitions done by Ranbaxy within a single week of 2005! I would be trying my best to emphasize on these strategies in my coming blog entries.

Eagerly waiting for your comments...