Eli Lilly Ranbaxy joint venture Essay
1488 WordsNov 6th, 20136 Pages
The Eli Lilly Ranbaxy joint venture allowed both Eli Lilly and Ranbaxy as separate companies to grow and expand as one venture. The support and reliability that both companies had with one another allowed for a strong business relationship to form which led to the same business strategy vision and goals. This joint venture eliminated trade with other companies for the same thing that one another could share to become one of the largest and most successful pharmaceutical companies in the Indian market. The problem that Eli Lilly Ranbaxy was being exposed to was a plateau of success with a joint venture and the thoughts of separating and selling stakes became an option. The companies together touch every target market…show more content…
Eli Lilly was approached by a leading pharmaceutical firm in India to consider building a joint venture together. Ranbaxy Laboratories began as a family business in the 1960’s, but with strong entrepreneurial skills the company grew to become one of the largest manufacturers for bulk drugs and generic drugs. The two companies considered pursuing a joint venture that would support on another’s products by supplying one other with ingredients to complete company products without having to trade with other companies internationally. The JV would potentially lead both companies, together to become a dominant force in the Indian market.
In 1993 the two companies decided to build a joint venture called Eli Lilly Ranbaxy JV that had a common business strategy and the intention to focus on high ethical standards, technology, and innovation. The JV focused directly on the Indian market since Ranbaxy had an existing relationship with the Indian Pharmaceutical Market they were able to continue exploring potential clients and business relationships. Ranbaxy alone was a very well-known pharmaceutical company that had a large distribution network and was able to easily obtain government approvals, licenses, distribution and supplies. The advantages to this joint venture are the work ethic by both company’s senior management teams as well as the previous relationships that
Prince S.A.: valuation of a cross border joint-venture Essay
1657 WordsApr 30th, 20157 Pages
1. Are the financial statements in Exhibit 3.7 consistent with V. Dourtan assumptions in Exhibit 3.1?
2. What’s is the most relevant valuation model, APV or Present Value?
3. How are multi-currency cash flows, currency risk and political risk being taken into account in our valuation model?
4. What is the relevant cost of capital for Jersey? For R.T. Nakit? Can they be different? Why?
5. What is the Dinar (Pound) value of the joint venture R.T. Nakit (jersey)? What are the project’s value drivers?
1- The data presented on exhibit 3.7 is, indeed following some of the assumptions stated on exhibit 3.1: minimum cash level is 10% of total assets, which was proved by dividing cash by total assets,…show more content…
The spread thus reflects pretty well the difference perceived by the market between the two countries in terms of political risk.
4-The cost of capital obtained for Jersey is 20.17% and the cost of capital for Prince is 22.84%. All the computations elaborated in order to answer this question can be seen on Appendix 1 and 2.
These two are different since both companies are facing different levels and types of risk. Although both companies are working together through a joint-venture, risks associated with this project differ for both. Jersey will be investing in a company amidst Mediterranean Rim countries, where it never invested before, and will be facing uncertainty and country-specific risk, such as political or currency risk. Prince will be entering in two new markets: not only the company will start producing garments, where before it only manufactured fabric, but also it will start exporting to Europe, facing an entirely new environment, with new competitors, new currency and new challenges.
5- The approach used to calculate the value of the Joint Venture was a DCF using the APV method. Since the two companies, Jersey and Prince, have distinct characteristics and costs of capital, they value the project differently. For Prince, the Joint Venture has a total