Renovating the ‘House of Antibiotics’ - Ranbaxy Laboratories Limited: At the Crossroads

As India edged nearer to full membership of the World Trade Organisation in 2005, Indian pharmaceutical companies faced new realities. For Ranbaxy Laboratories, a major player in the Indian generic drugs market, a successful adaptation to life in this new market was key to the company’s future. This case, Ranbaxy Laboratories Limited: At the Crossroads, by Amitava Chattopadhyay and Swati Srivastava, examines the choices facing one pharmaceutical company in one of the fastest growing sectors of the Indian economy.

by Amitava Chattopadhyay, Swati Srivastava
Last Updated: 23 Jul 2013

Ranbaxy Laboratories had articulated a desire to become ‘a research based international pharmaceutical company’ since 1993. As the new millennium and new challenges arrived, that wish was becoming a reality. The case, Ranbaxy Laboratories Limited: At the Crossroads, by Amitava Chattopadhyay, L'Oréal Chaired Professor of Marketing-Innovation and Creativity and Professor of Marketing, and Swati Srivastava, Research Associate, examines the background and context of a crucial marketing decision for Ranbaxy, analysing the characteristics of the Indian market and the choices it faces in an intensely competitive industry.

Domestic pharmaceutical firms in India had been assisted by their freedom from product patents. Firms such as Ranbaxy Laboratories had launched products locally long before product patents expired and were able to build strong brand equity and robust pipelines of products. However, as new patent regulation loomed following India’s entry into the WTO, Ranbaxy had started to invest in research and had developed a patented new drug delivery system that could be used to launch one-a-day versions of several of the antibiotics in its portfolio. The question was: which antibiotic to choose and how to market a one-a-day formulation in the highly price-sensitive Indian market?

One option under consideration was Cifran. Launched in 1989, Cifran had soon become the key brand in Ranbaxy’s anti-infective portfolio, eventually becoming the most accepted antibiotic product in the country and taking its place among the top 10 brands. Yet by 2001, Cifran’s revenue growth had recorded a decline of 2.5% in a maturing market with stiff market and price competition. Further, there was doubt among consumers about its efficacy after 12 years on the market due to the emergence of drug-resistant bacteria. Was Cifran less effective now? Ranbaxy thought not. Could its novel drug delivery system, already licensed to Bayer outside India, be used to rejuvenate Cifran?

The decision was not without risk as no successful one-a-day formulation had yet been launched in India. The risk was particularly high with Cifran as, even though market share had recently declined, it was still Ranbaxy’s top-selling antibiotic. If the foray with a one-a-day formulation failed, would it damage the Cifran brand and precipitate a decline in sales and market share? If this was likely, should Ranbaxy consider a smaller antibiotic in its portfolio to test the water for a one-a-day antibiotic in the Indian market? Whatever its decision, Ranbaxy needed to decide how best to position and market the new brand. Having invested hugely in R&D it had to succeed in launching a brand using its newly patented technology. The future of the company was at stake. Would Ranbaxy get it right?

INSEAD 2003

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