Strategic Alliances Individual Assignment

A report submitted to

Prof. Dhirendra Mani Shukla

In partial fulfillment of the requirements of the course

Strategic Alliances

By

Parikshit Mishra

Roll No. 2111204

On

21 – 06 – 2022
 Honor Code

I , Parikshit Mishra, 2111204 have not indulged in malpractices, plagiarism or any

activities of academic dishonesty in this assignment. I further agree that the
submission of any academic work shall constitute a representation on my part both
that such work has been done, and its submission is being made, in compliance with
all applicable provisions of the Program Manual. I am fully aware of the consequences
of academic indiscipline and if I am found to be guilty, I shall comply with the
punishment rewarded by the Institute. Furthermore, my responsibility includes taking
action/ reporting to program office when I have witnessed or am aware of another’s
act of academic dishonesty.
I pledge to uphold the principles of honesty and responsibility at IIMU.

Date: 21 – 06- 2022 Signature:

Question:

Search and identify alliances formed by leading Indian companies, in the last 10 years, in one
of the below mentioned industrial sectors and analyze purpose/objectives and
motives/rationale of those alliances.

Sector 1: Information and communication technologies

Sector 2: Bio - pharmaceutical industry
Sector 3: Semiconductor Industry

Answer:

Industry selected for the purpose of this study: Bio – pharmaceutical industry (i.e.,
biotechnology and pharmaceutical industries)

Over the past decade, there has been an increase in the number of mergers and acquisitions in
the Indian bio – pharmaceutical industry. This increase can be contributed majorly to the
following reasons:

 Expansion of product line: Building product lines through mergers and acquisitions
seems a very lucrative and simple method for the pharmaceutical companies. This is
because in – house development of medicines requires a lot of research and
development which is a capital-intensive task.
 Access to approved facilities outside India: Drugs developed in India often find
themselves under stringent scrutiny in the foreign markets. Mergers and acquisitions
help Indian companies by – pass this scrutiny.
 Extra distribution channels and market share: With mergers and acquisitions, Indian
pharmaceutical companies can easily access foreign markets.
 Duress from governmental agencies and insurance firms to reduce costs.

The above factors have been instrumental in the proliferation of alliances in the bio –
pharmaceutical space. Some of the major alliances of the last 10 years are listed below.
Merger between Ranbaxy and Sun Pharma (2015)
The merger of Ranbaxy and Sun Pharma engendered the largest pharmaceutical company in
India. This alliance was announced on 25th March 2015 and was valued at USD 4 billion.
Instead of going for an acquisition, Sun Pharma chose merger for various tax, legal and
regulatory reasons. The primary motives of this merger are enlisted below:
 Strategic reasons:
o Penetration into new markets for Sun Pharma.
o Increased product portfolio as both Ranbaxy and Sun Pharma were
complimentary to each other in their areas of expertise. Sun Pharma is
globally renowned as a major specialist whereas Ranbaxy is a leader in the
generic medicine domain.
 Economic reasons:
o The shareholders of Ranbaxy received 0.8 shares of Sun Pharma for each
share of Ranbaxy.
 Operational reasons:
o Ranbaxy was facing financial losses and import bans from the Food and Drug
Administration in the US.
o Multiple civil and criminal charges for irregularities in India.

Acquisition of Primal Healthcare by Abbott (2010)

Primal Healthcare was acquired the US – based Abbott in 2010. The domestic formulation
business of Primal Healthcare was transferred to Abbott for a sum of USD 3.72 billion.
Under this acquisition, 350 trademarks were assigned to Abbott. 2% of this consideration was
also towards putting a non – compete on Primal Healthcare. The non – compete restricted
Primal Healthcare and its affiliates from engaging in formulation business in India or any
other emerging markets for the next eight years. The motives behind this acquisition are
enlisted below:
 Strategic reasons:
o Abbott gained 350 trademarks from Primal Healthcare.
o This acquisition was part of Abbott’s strategy to foray into the Indian
pharmaceutical industry which was booming at the time.
  Economic reasons:
o Although Primal Healthcare had a non – compete, it could still use the money
received from this acquisition to breathe new life to other domains and
significantly increase its revenue.
 Operational reasons:
o Both the partners gained operational benefits from this acquisition. Primal
Healthcare strengthened its other businesses and Abbott got access to the
Indian markets.

Acquisition of US – based Gavin by Lupin (2015)

In July 2015, Lupin completed the largest acquisition by an Indian company by acquiring the
US – based Gavin. This acquisition was completed for USD 880 million. The motives behind
this acquisition are as follows:
 Strategic reasons:
o This acquisition enabled Lupin’s expansion into the US markets.
o Gavin has a history of strong compliance with USFDA and Lupin stood to
benefit from it.
 Economic reasons:
o Lupin funded Gavin USD 100 million through cash reserves and bridge loans.
 Operational reasons:
o This acquisition offered a portfolio of 120 in – market products and 185
patents pending approval for both Lupin and Gavin.

Acquisition of UCB by Dr. Reddy’s Laboratories (2016)