Strategic Value-Chain Analysis of Indian Pharmaceutical Alliances

Abstract

A number of firms around the world have been using strategic alliances to become more competitive globally. The reasons attributed to such alliances vary from economies of scale, increased revenue, cross selling, synergy, tax write-offs, diversification and resource transfers among others. After the liberalization of Indian economy in 1991, Indian companies have used these strategic alliances to expand into other markets and prepare for increased competition at home. But after joining the World Trade Organization in 1995, India had to change its patent laws by 1 January 2005 to meet its commitments under the WTO's agreement on Trade Related Intellectual Property Rights (TRIPS). In the post-2005 scenario, the pharmaceutical industry has undergone a significant change due to the TRIPS agreement. Though a number of reasons are attributed to these strategic alliances in literature, there is no particular pattern that can be observed in these alliances. This study aims at analyzing the Indian Pharmaceutical Industry and the strategic alliances in the recent past and what drives these alliances. A value chain framework has been proposed that analyses the critical capabilities needed along the value chain in the Pharmaceutical Industry, the existing capabilities of the firms and how these alliances are supposed to bridge the capability gap.