Journal of Case Research Volume II Issue 01 Page | 1 Global Strategy for Growth: A Case of Ranbaxy Laboratories Padmanabha Ramachandra Bhatt 1 “Personally, I feel that companies who constantly innovate to provide better products and services and who can offer superior value propositions to the consumer are the ones likely to command more respect globally than others” 2 Malvinder Mohan Singh, CEO and MD, Ranbaxy Laboratories Ltd Indian pharmaceutical industry was worth of $ 8 billion in 2006 and had been growing at an average rate of 8–9 %. The industry was highly fragmented with more than 20,000 registered units and 30% of market was controlled by top ten companies and the rest of 70% by small companies. The Global pharmaceutical industry was estimated at $ 600 billion in 2006. Indian pharmaceutical industry has become more innovative and enterprising with more investment in R&D especially since the WTO agreement was signed. Ranbaxy Laboratories Ltd. was India’s largest pharmaceutical company with revenue of US $ 260 million in the domestic market and $ 1.3 billion in the global market in 2006. In the domestic market Ranbaxy enjoyed a share of 5.1% with nine brands in the Top 100 list in 2006. It is one of the largest ANDA (Abbreviated New Drug Application) filers with US FDA ( United States Food and Drug Administration). The company’s offices have spread over 49 countries with employment of 12,000. It is one of the ten generics players in the world. Three-forth of Ranbaxy’s revenue comes from international sales, with the US alone accounting for almost one third. The range of products covers a wide band of therapies with a total over 5000 SKUs (Stock Keep Units) globally. Ranbaxy’s vision was “To become a research based international pharmaceutical company”. 1 Padmanabha Ramachandra Bhatt, Ph.D., Visiting Professor, Universiti Utara Malaysia Email: [email protected]2 Ranbaxy’s World, December, 2007
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Journal of Case Research Volume II Issue 01
Page | 1
Global Strategy for Growth: A Case of Ranbaxy Laboratories
Padmanabha Ramachandra Bhatt1
“Personally, I feel that companies who constantly innovate to provide better products and services and who can offer superior value propositions to the consumer are the ones likely to command more respect globally than others”2
Malvinder Mohan Singh, CEO and MD, Ranbaxy Laboratories Ltd
Indian pharmaceutical industry was worth of $ 8 billion in 2006 and had been growing at an
average rate of 8–9 %. The industry was highly fragmented with more than 20,000 registered
units and 30% of market was controlled by top ten companies and the rest of 70% by small
companies. The Global pharmaceutical industry was estimated at $ 600 billion in 2006. Indian
pharmaceutical industry has become more innovative and enterprising with more investment in
R&D especially since the WTO agreement was signed.
Ranbaxy Laboratories Ltd. was India’s largest pharmaceutical company with revenue of US $
260 million in the domestic market and $ 1.3 billion in the global market in 2006. In the
domestic market Ranbaxy enjoyed a share of 5.1% with nine brands in the Top 100 list in 2006.
It is one of the largest ANDA (Abbreviated New Drug Application) filers with US FDA ( United
States Food and Drug Administration). The company’s offices have spread over 49 countries
with employment of 12,000. It is one of the ten generics players in the world. Three-forth of
Ranbaxy’s revenue comes from international sales, with the US alone accounting for almost one
third. The range of products covers a wide band of therapies with a total over 5000 SKUs (Stock
Keep Units) globally.
Ranbaxy’s vision was “To become a research based international pharmaceutical company”.
1 Padmanabha Ramachandra Bhatt, Ph.D., Visiting Professor, Universiti Utara Malaysia
Exhibit 4: A comparison between Ranbaxy and Daiichi Sankyo
(US$ in billions)
Daiichi Sankyo
Ranbaxy Laboratories
Net Sales Overseas sales Research and Development Operating Income Net income Assets Return on Equity Earnings per share Number of consolidated subsidiaries Number of employees
8.2 3.3 1.5 1.4 0.9
13.9 7.8%
$ 1.26
43 15,349
1.0 0.6 0.1 0.2 0.1 0.5
28.8% $ 0.35
18
8,141
Source: Business World, June 13, 2008
Journal of Case Research Volume II Issue 01
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Exhibit 5: Discovery Process and Stages of Drug Development
DISCOVERY PROCESS Period: upto 6 yrs Cost: Roughly $ 60 million Odds of drug reaching market: 1: 10,000 Identifying & validating targets: this involves developing the concept of how a new drug can treat a disease. Compound that should be pursued further are short listed. Screening: compound that have desirable potencies and that react encouragingly are pulled out. These are the ‘Hits’, converting Hits into ‘Leads’ calls for further refinement in the compound, during which solubility, toxicity (quality of safe doses), absorbtion, metabolism etc, are tested even as the potency and activity are maintained. STAGES OF DRUG DEVELOPMENT Period: upto 12 years Cost: upto $200-250 million Odds of drug reaching market: 1:200 Pre-clinical trials: toxicity and pharmacokinetics (absorption, distribution, metabolism, elimination) are observed via tests in labs and in animals. IND FILING: Company files an application for an investigational new drug (IND) with the FDA. This filing includes results of pre-clinical trials and the plan for human clinical trials. PHASE 1 TRIALS: Conducted on 20-100 healthy volunteers to prove safety. Once molecules enters clinical trials, odds of success drop to 1:5 PHASE 2 TRIALS: 100-300 persons suffering from the disease are treated. Considered by many companies as the stage to opt for licensing agreement. PHASE 3 TRIALS: involves between 1,000 to 5,000 patients in a bid to verify previous trials. NEW DRUG APPROVAL FILING: FDA reviews information, and if satisfied gives its approval. If it feels molecules isn’t yet ready for market, may call for phase 4 trails. POST-MARKETING SURVEYS: Companies have to conduct continuous surveillance once drug hits market, all through the life of the drug. Serious reactions can result in drug withdrawal. Sales and marketing cost can take the entire cost of exercise right from drug discovery to development to as much as $450 million.
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Source: BUSINESS TODAY Ocotber 13 2002.
Exhibit 6: Ranbaxy Laboratories in Historical Perspectives
YEAR DESCRIPTION
1961 Company Incorporated
1973 Ranbaxy goes public
A multipurpose chemical plant is setup for the manufacture of APIs at Mohali in India
1977 Ranbaxy’s first joint venture in Lagos (Nigeria) is setup
1983 A modern dosage forms facility at Dewas (MP) in India goes on stream
1985 Ranbaxy Research Foundation is established
Stancare, Ranbaxy’s second pharmaceutical marketing division, starts functioning
1987 Production start-up at the modern APIs plant at Toansa (Punjab), makes Ranbaxy the country’s largest manufacturer of antibiotics/antibacterials
1988 Ranbaxy’s Toansa plant gets US FDA approval
1990 Ranbaxy is granted US patent for Doxycyline
1991 New state-of-the-art facility for Cephalosporins set up at Mohali
US patent granted for Cephalosporins
1992 Company enters into an agreement with Eli Lilly & Co of USA for setting up a joint venture in India to market select Lilly products
1993 Company enters into an agreement to setup a joint venture in China Ranbaxy (Guangzhou China) Limited
Ranbaxy enunciates its corporate mission ‘to become a Research based International Pharmaceutical Company
1994 The new Research Centre at Gurgaon,(near Delhi), becomes fully operational
Established Regional Headquarters in London (UK) and Raleigh (USA)
The Fermentation pilot plant at Paonte Sahib is commissioned
Ranbaxy’s GDR listed in Luxembourgh Stock Exchange
1995 Acquisition of Ohm Laboratories, a manufacturing facility in the US. Inauguration of FDA approved, state-of-the-art new manufacturing wing, at Ranbaxy’s US subsidiary Ohm Laboratories Inc.
1997 Ranbaxy Laboratories Limited crosses a sales turnover of Rs. 10,000 million, with its exports reaching an all time high of Rs. 5,000 million
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1998 Ranbaxy enters USA, world’s largest pharmaceutical market, with products under its own name.
Ranbaxy filed its first Investigational New Drug (IND) application with the Drugs Controller General of India (DCGI) for approval to conduct Phase I clinical trials
1999 DCGI grants approval to conduct phase I clinical trials for RBx-2258, and the trials commence from June 10, 1999
Bayer AG, Germany and Ranbaxy sign an agreement where Bayer obtains exclusive development and worldwide marketing rights to an oral once daily formulation of Ciprofloxacin, originally developed by Ranbaxy.
2000 Ranbaxy files IND application for Asthma Molecule RBx-7796 after successful completion of preclinical studies.
Ranbaxy acquires Bayer’s Generics business (trading under the name of Basics) in Germany
Ranbaxy forays into Brazil, the largest pharmaceutical market in South America and achieves global sales of US $ 2.5 million in this market
2001 Ranbaxy took a significant step forward in Vietnam by initiating the setting up of a new manufacturing facility with an investment of US $ 10 million
Ranbaxy achieved a turnover of US $ 600 million for the year 2001 and moved closer to achieving the target of 1 billion dollar by 2004.
Ranbaxy USA crosses sales of US $ 100 million, fastest growing company in the US
2002 Ranbaxy files IND for an Anti-bacterial Oxazolidine-RBx-7644
Ranbaxy launched Cefuroxime Axetil post approval from USFDA for 125mg, 250mg, 500mg Tablet, first approval granted to any generic company for this product
Ranbaxy receives permission from DCGI to conduct Phase-I clinical trials for RBx 7796 (Anti-Asthma)
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2003 Ranbaxy receives The Economic Times Award for Corporate Excellence for ‘The company of the year 2002-03’
Ranbaxy and Glaxo SmithKline Plc (GSK) accelerate their discovery programmes through a global alliance for drug discovery and development. While Ranbaxy will leverage its early product development strengths, Glaxo would use its expertise at late development stage to complete the development process
RBx 7796, Ranbaxy’s first NCE in the respiratory segment successfully completes Phase I clinical trials and steps into Phase II.
Ranbaxy files an IND application for RBx 9001, its second NCE for the treatment of Benign Prostatic Hyperplasia (BPH)
Cipro XR 500mg and 1g, based on the techonogy developed by Ranbaxy, were launched in USA by Bayer AG
Ranbaxy launched the first branded product Sotret (isotretinoin) for 10mg, 20mg and 40mg capsules in USA
2004 Ranbaxy acquired the generics business of RPG Aventies Life Sciences in France to enter European Market
2005 Ranbaxy acquired 18 generic drugs from Spain’s Eframes for sale the local market
2006 Ranbaxy’s US arm buys patents, trademarks, and automated manufacturing equipment from Senetek for its disposable autoinjector for self-administration of parental drugs for anaphylactic shock
Ranbaxy’s Italian subsidiary acquires the unbranded generic business of Allen, a division of GlaxoSmithKline, to complement its own pipeline for the Italian Market.
Buys 96.7% of Romanian drug maker Terapia from Advent International for $324 million. Combined with Ranbaxy’s own operation in Romania, the Terapia acquisition creates Romania’s largest generic firm
Aquires genrics company, Ethimed, atop 10 player in Belgium. Provide Ranbaxy a base from where to manage and expand its operations in the Benelux countries
Ranbaxy’s Spanish subsidiary purchases the Mundogen generics business of GlaxoSmithKiline in Spain. The acquisition beefs up Ranbaxy’s product portfolio in the country.
2008 Daiichi Sankyo acquired over 51% stake in Ranbaxy Laboratories Ltd at Rs. 737 per share. Malvinder Singh sold out his stake of 34.8% to Daiichi Sankyo.
Source: www.ranbaxy.com/history_ranbaxy.htm Business Today, September 10, 2006