The intra and inter-firm geography of EMNCs: India’s pharmaceuticals Rory Horner Clark University...
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Transcript of The intra and inter-firm geography of EMNCs: India’s pharmaceuticals Rory Horner Clark University...
The intra and inter-firm geography of EMNCs: India’s
pharmaceuticals
Rory HornerClark University
Graduate School of Geography
Presentation for ‘Emerging Multinationals’ conference at Copenhagen Business School, October 2008.
Layout Background/context Intra-firm
- How international are India’s big pharma? (sales)
- Are Indian pharma establishing operations abroad? (subsidiaries)
- How global are manufacturing and R&D? Inter-firm alliances
- How are Indian pharma using inter-firm alliances in their internationalisation?
Conclusions/future research
Developed countries (e.g. UNCTAD 2006)
2000s
Where does developing country-FDI locate?
1980s
Other developing countries(e.g. Kumar 1982, Wells 1983)
Developing-country FDI
From intra-firm to inter-firm
Traditional ‘intra-firm’ e.g. Vernon (1966), Dunning (1988)
Inter-firm linkagese.g. Mathews (2006)
Firm Total assets (Rs. Million)
Net sales (Rs. Million)
HQ location
Year established
Ranbaxy Laboratories 34 068.2 35 754.4 New Delhi 1961
Cipla 24 521.8 28 974.1 Mumbai 1935
Dr. Reddy’s Laboratories
31 860.1 20 058.5 Hyderabad 1984
Sun Pharmaceuticals Industries
32 107.6 16 815.5 Mumbai 1983
Aurobindo Pharma 21 106.3 13 698.7 Hyderabad 1986
Lupin 15 565.5 15 965.4 Mumbai 1968
Jubilant Organosys 14 484.4 13 849.1 Noida 1978
Orchid Chemicals and Pharmaceuticals
18 132.8 8734.6 Chennai 1992
Wockhardt 16 149.0 9600.3 Mumbai 1959
Nicholas Piramal India 11 627.1 14 062.8 Mumbai 1988
India’s ‘big pharma’
Source: Business World India’s “BW Real 500: India’s top companies” (2007). HQ location and year established are sourced from company websites and annual reports.
Reverse engineering
Dr Reddy’s: “We began in 1984 and, like some other players of that era in India, concentrated on strengthening reverse engineering capabilities to produce high quality bulk drugs and formulations at low costs, and sell them in the domestic market.
To ….
The importance of these skills cannot be exaggerated, for they created the technological foundations for your Company’s successful foray into the international generics market” (Dr. Reddy’s 2002).
How international are India’s big pharma?
0
20
40
60
80
100
2002 2003 2004 2005 2006 2007
Ranbaxy
Dr. Reddy’s
Cipla
Lupin
Sun Pharmaceuticals
Jubilant Organosys
Orchid
Wockhardt
Nicholas Piramal
Year
% o
f gro
ss r
even
ue f
rom
out
side
Indi
a
0
20
40
60
80
100
2002 2003 2004 2005 2006 2007
Ranbaxy
Dr. Reddy’s
Cipla
Lupin
Sun Pharmaceuticals
Jubilant Organosys
Orchid
Wockhardt
Nicholas Piramal
0
20
40
60
80
100
2002 2003 2004 2005 2006 2007
Ranbaxy
Dr. Reddy’s
Cipla
Lupin
Sun Pharmaceuticals
Jubilant Organosys
Orchid
Wockhardt
Nicholas Piramal
Year
% o
f gro
ss r
even
ue f
rom
out
side
Indi
a
0
20
40
60
80
100
2002 2003 2004 2005 2006 2007
Ranbaxy
Dr. Reddy’s
Cipla
Lupin
Sun Pharmaceuticals
Jubilant Organosys
Orchid
Wockhardt
Nicholas Piramal
Share of gross revenue from abroad for India’s largest pharmaceutical firms 2002→2007
Are Indian pharma establishing operations abroad?
0
10
20
30
40
50
60
70
80
90
100
Cipla
Nicholas Piramal
Orchid
Jubilant Organosys
Sun Pharmaceuticals
Lupin
Aurobindo Pharma
Wockhardt
Dr. Reddy’s
Ranbaxy
0
10
20
30
40
50
60
70
80
90
100
Cipla
Nicholas Piramal
Orchid
Jubilant Organosys
Sun Pharmaceuticals
Lupin
Aurobindo Pharma
Wockhardt
Dr. Reddy’s
Ranbaxy 0
10
20
30
40
50
60
70
80
90
100
Cipla
Nicholas Piramal
Orchid
Jubilant Organosys
Sun Pharmaceuticals
Lupin
Aurobindo Pharma
Wockhardt
Dr. Reddy’s
Ranbaxy
0
10
20
30
40
50
60
70
80
90
100
Cipla
Nicholas Piramal
Orchid
Jubilant Organosys
Sun Pharmaceuticals
Lupin
Aurobindo Pharma
Wockhardt
Dr. Reddy’s
Ranbaxy
0
10
20
30
40
50
60
70
80
90
100
Cipla
Nicholas Piramal
Orchid
Jubilant Organosys
Sun Pharmaceuticals
Lupin
Aurobindo Pharma
Wockhardt
Dr. Reddy’s
Ranbaxy 0
10
20
30
40
50
60
70
80
90
100
CiplaNicholas PiramalOrchidJubilant OrganosysSun PharmaceuticalsLupinAurobindo PharmaWockhardtDr. Reddy’sRanbaxy 0
10
20
30
40
50
60
70
80
90
100
Cipla
Nicholas Piramal
Orchid
Jubilant Organosys
Sun Pharmaceuticals
Lupin
Aurobindo Pharma
Wockhardt
Dr. Reddy’s
Ranbaxy
0
10
20
30
40
50
60
70
80
90
100
Cipla
Nicholas Piramal
Orchid
Jubilant Organosys
Sun Pharmaceuticals
Lupin
Aurobindo Pharma
Wockhardt
Dr. Reddy’s
Ranbaxy
0
10
20
30
40
50
60
70
80
90
100
Cipla
Nicholas Piramal
Orchid
Jubilant Organosys
Sun Pharmaceuticals
Lupin
Aurobindo Pharma
Wockhardt
Dr. Reddy’s
Ranbaxy
0
10
20
30
40
50
60
70
80
90
100
Cipla
Nicholas Piramal
Orchid
Jubilant Organosys
Sun Pharmaceuticals
Lupin
Aurobindo Pharma
Wockhardt
Dr. Reddy’s
Ranbaxy
0
10
20
30
40
50
60
70
80
90
100
Cipla
Nicholas Piramal
Orchid
Jubilant Organosys
Sun Pharmaceuticals
Lupin
Aurobindo Pharma
Wockhardt
Dr. Reddy’s
Ranbaxy
No
. o
f s
ub
sid
iari
es
0
10
20
30
40
50
60
70
80
90
100
Cipla
Nicholas Piramal
Orchid
Jubilant Organosys
Sun Pharmaceuticals
Lupin
Aurobindo Pharma
Wockhardt
Dr. Reddy’s
Ranbaxy
0
10
20
30
40
50
60
70
80
90
100
Cipla
Nicholas Piramal
Orchid
Jubilant Organosys
Sun Pharmaceuticals
Lupin
Aurobindo Pharma
Wockhardt
Dr. Reddy’s
Ranbaxy0
10
20
30
40
50
60
70
80
90
100
Cipla
Nicholas Piramal
Orchid
Jubilant Organosys
Sun Pharmaceuticals
Lupin
Aurobindo Pharma
Wockhardt
Dr. Reddy’s
Ranbaxy
0
10
20
30
40
50
60
70
80
90
100
Cipla
Nicholas Piramal
Orchid
Jubilant Organosys
Sun Pharmaceuticals
Lupin
Aurobindo Pharma
Wockhardt
Dr. Reddy’s
Ranbaxy0
10
20
30
40
50
60
70
80
90
100
Cipla
Nicholas Piramal
Orchid
Jubilant Organosys
Sun Pharmaceuticals
Lupin
Aurobindo Pharma
Wockhardt
Dr. Reddy’s
Ranbaxy
0
10
20
30
40
50
60
70
80
90
100
Cipla
Nicholas Piramal
Orchid
Jubilant Organosys
Sun Pharmaceuticals
Lupin
Aurobindo Pharma
Wockhardt
Dr. Reddy’s
Ranbaxy 0
10
20
30
40
50
60
70
80
90
100
Cipla
Nicholas Piramal
Orchid
Jubilant Organosys
Sun Pharmaceuticals
Lupin
Aurobindo Pharma
Wockhardt
Dr. Reddy’s
Ranbaxy
0
10
20
30
40
50
60
70
80
90
100
Cipla
Nicholas Piramal
Orchid
Jubilant Organosys
Sun Pharmaceuticals
Lupin
Aurobindo Pharma
Wockhardt
Dr. Reddy’s
Ranbaxy
0
10
20
30
40
50
60
70
80
90
100
Cipla
Nicholas Piramal
Orchid
Jubilant Organosys
Sun Pharmaceuticals
Lupin
Aurobindo Pharma
Wockhardt
Dr. Reddy’s
Ranbaxy 0
10
20
30
40
50
60
70
80
90
100
CiplaNicholas PiramalOrchidJubilant OrganosysSun PharmaceuticalsLupinAurobindo PharmaWockhardtDr. Reddy’sRanbaxy 0
10
20
30
40
50
60
70
80
90
100
Cipla
Nicholas Piramal
Orchid
Jubilant Organosys
Sun Pharmaceuticals
Lupin
Aurobindo Pharma
Wockhardt
Dr. Reddy’s
Ranbaxy
0
10
20
30
40
50
60
70
80
90
100
Cipla
Nicholas Piramal
Orchid
Jubilant Organosys
Sun Pharmaceuticals
Lupin
Aurobindo Pharma
Wockhardt
Dr. Reddy’s
Ranbaxy
0
10
20
30
40
50
60
70
80
90
100
Cipla
Nicholas Piramal
Orchid
Jubilant Organosys
Sun Pharmaceuticals
Lupin
Aurobindo Pharma
Wockhardt
Dr. Reddy’s
Ranbaxy
0
10
20
30
40
50
60
70
80
90
100
Cipla
Nicholas Piramal
Orchid
Jubilant Organosys
Sun Pharmaceuticals
Lupin
Aurobindo Pharma
Wockhardt
Dr. Reddy’s
Ranbaxy
0
10
20
30
40
50
60
70
80
90
100
Cipla
Nicholas Piramal
Orchid
Jubilant Organosys
Sun Pharmaceuticals
Lupin
Aurobindo Pharma
Wockhardt
Dr. Reddy’s
Ranbaxy
No
. o
f s
ub
sid
iari
es
0
10
20
30
40
50
60
70
80
90
100
Cipla
Nicholas Piramal
Orchid
Jubilant Organosys
Sun Pharmaceuticals
Lupin
Aurobindo Pharma
Wockhardt
Dr. Reddy’s
Ranbaxy
0
10
20
30
40
50
60
70
80
90
100
Cipla
Nicholas Piramal
Orchid
Jubilant Organosys
Sun Pharmaceuticals
Lupin
Aurobindo Pharma
Wockhardt
Dr. Reddy’s
Ranbaxy0
10
20
30
40
50
60
70
80
90
100
Cipla
Nicholas Piramal
Orchid
Jubilant Organosys
Sun Pharmaceuticals
Lupin
Aurobindo Pharma
Wockhardt
Dr. Reddy’s
Ranbaxy
0
10
20
30
40
50
60
70
80
90
100
Cipla
Nicholas Piramal
Orchid
Jubilant Organosys
Sun Pharmaceuticals
Lupin
Aurobindo Pharma
Wockhardt
Dr. Reddy’s
Ranbaxy
Res
t of
Asi
aEur
ope
North
Am
eric
a A
fric
aC
entr
al &
S
outh
A
mer
ica
Oce
ania
Subsidiaries locations 2002 and 2007
How global is manufacturing and R&D?
• Concentration in India
•More manufacturing than R&D abroad
•R&D focus in USA.
How are Indian pharma engaging in alliances and linkages?
Limited evidence of industry-government-university linkages
Inter-firm linkages have a distinct geography.
→ 93% with Non-Indian firms
→ 93% of those with North American or European firms
How are Indian pharma EMNCs engaging in inter-firm linkages? Classification of international inter-firm alliances of India’s top 10
pharma 2002- mid 2008
Manufacturing Marketing and distribution
R&D
Inward 24 35 6
Co/joint 0 5 22
Outward 0 19 4
Conclusions and future research Growing internationalisation, targeting the
regulated markets Proliferation of alliances, yet still strong intra-
firm advantage Sources of Indian advantage? Sustainable? How will internationalisation of these firms
evolve over time? Importantly, will these EMNCs effectively
serve the needs of the base of the economic pyramid?
Within India:
Within Western Europe and North America
Empirical focus: India’s pharmaceuticals
A ‘knowledge economy’ sector
Prominent in the internationalisation of Indian EMNCs
Pharmaceutical industry noted for being alliance-driven (e.g. Birch 2008)
Manufacturing by firm
R&D by firm
Alliances by chronology