Cipla Global Ltd.: Generics versus Drug Discovery

Description

Cipla Global Ltd.: Generics versus Drug Discovery: Abstract

Cipla Global Ltd. (CGL) is a real-life, undisguised decision case. CGL is one of India’s top pharmaceutical companies. Thanks to India’s process patent regime (1970–2005), Dr. Yusuf Hamied, the company’s chairman, managed to catapult the company to its position as a leading generics manufacturer. However, in 2005, India changed its Patents Act to make it TRIPS compliant. Faced with Western pharmaceutical companies’ ‘evergreening’, CGL became a prominent crusader against multinationals. It fought and won patent cases in Indian courts. On the other hand, the government of India took advantage of the TRIPS provisions to authorize Indian companies to manufacture copies of patented drugs without the patent holder’s permission. This infuriated Western pharmaceutical companies because they saw this provision as an infringement on their rights, which would lead to decreased revenues. As a consequence, they started lobbying their respective governments to put pressure on the Indian government. The case ends with a dilemma about the best course of action for CGL going forward, given the various options offered by the industry, on the one hand, and the ambitions of its chairman, on the other.

Teaching objectives

• Determine the various issues facing a relatively small company in an emerging market, but with international aspirations.
• Appreciate the existence of several strategic groups in the industry, as well as their business models and value chains – Being part of a strategic group has implications for growing the business, as does the presence of mobility barriers that hinder movement from one strategic group to another.
• Understand the global context.
• Comprehend how a company arrives at one or more strategies that will propel it to become a fairly large globally oriented entity in a relatively short timeframe.

Main themes covered

• Trends and trade in the global pharmaceutical industry
• Global pharmaceutical value chain patent laws, their impact on the Indian pharmaceutical sector
• The Indian pharmaceutical industry: nature and competitive dynamics
• Cipla Ltd.’s positioning and the consequent fall out

Concepts and theories related to the case

• Environmental changes and their impact on the business strategy of a pharmaceutical company
• Cost dynamics: how they can help a domestic generics company to go global
• Regional strategies that can assist a company to internationalize its operations and complement its efforts to become an MNC manufacturing and marketing generics

Additional information

Teaching notes are available for professors. Contact the HEC Montréal Case Centre.