Ranbaxy's Patent Litigations in the United States
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Case Details:
Case Code : ECON015
Case Length : 14 Pages
Period : 1993-2005
Pub Date : 2006
Teaching Note :Not Available
Organization : Ranbaxy Laboratories Limited
Industry : Pharmaceutical
Countries : USA
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Introduction Contd...
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Analysts felt that a victory against Pfizer over
Lipitor would have given an enormous impetus to Ranbaxy in its growth
plans as the drug sales would have helped it more than double its
revenues in under a year.
Ranbaxy's successful challenge to Glaxo Wellcome (Glaxo)10 and the launch
of a generic version of Ceftin11 in 2002 had boosted the company to go
ahead and challenge patents as a part of its expansion strategy in the
US. Ranbaxy's successful launch of the generic version of Ceftin in
2002, helped increase its US revenues from $113 million in 2001 to $296
million in 2002. However, some analysts felt that Ranbaxy was getting
too caught up in patent litigations in the US, where a single patent
litigation can cost a company as much as $15 million or even more. |
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In January 2006, when Ranbaxy announced its annual results for 2005, the steep hike in R&D spending
($104 million, up from $75 million in 2004), pricing pressure in the US, (its
biggest revenue contributor), the lack of new product launches, as well as, the
high costs of patent litigation ($30 million) in the US and other European
countries were all very well reflected, when it reported a whopping 62% fall in
annual net profit (Refer Exhibit I).
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Background
Ranbaxy was established in 1937, in Amritsar, Punjab, India, by Ranjit
Singh and Dr. Gurbax Singh, who were the distributors of vitamins and
anti-tuberculosis drugs for a Japanese pharmaceutical company. In 1951,
Ranbaxy took on distribution for an Italian pharmaceutical company –
Lapetit. Bhai Mohan Singh, a trader, joined the company as a partner at
this point. Ranbaxy established its first manufacturing plant, in 1961,
with assistance from Lapetit. In 1966, Lapetit decided to break the
joint venture with Ranbaxy owing to business differences and Ranbaxy
started to replace all of Lapetit's brands, by developing its own... |
Excerpts >>
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