The Union government finally gave approval to US pharma major Eli Lilly for converting its 50:50 joint venture Eli Lilly Ranbaxy Ltd into a wholly-owned subsidiary by buying out the 50 per cent equity stake of Ranbaxy Lab. Earlier in January this year, Ranbaxy had decided to divest its equity stake of 72 lakh equity shares of Rs 10 each in Eli Lilly Ranbaxy Ltd, a joint venture with Eli Lilly Netherlands BV, in view of calling off its global alliance with the latter and the agreement was subject to the US major getting the approval for third party manufacturing (toll manufacturing) by the new subsidiary. A MoU was also been signed in this regard. With this, Eli Lilly becomes the second pharma MNC, after Pfizer Inc, to set up a 100 per cent owned pharma venture in India. However, these units would function as marketing arms. The report has cited that the Eli Lilly subsidiary would be allowed to outsource its range of products by entering into third party manufacturing arrangements.
According to Eli Lilly sources, the company would soon sign the final agreement with Ranbaxy after receiving approval letter from the government. The US pharma major is buying out the stake for a consideration of Rs 78 crore. The company is also expected to pump more capital into the subsidiary for funding its proposed expansion plan, which will be effected in phases.
The company is also proposed to continue its existing arrangement with Ranbaxy and Halol (Gujarat) MJPL for manufacturing some products under the Eli Lilly trademark for the joint venture.
Distaclor and Keflex, both antibiotics, are among the trade mark products of Eli Lilly being manufactured by Ranbaxy in India, while MJPL manufactures some of the generic products for the Eli Lilly venture in India under licensing agreement.
Besides marketing, the Eli Lilly also ventures into clinical research. Ranbaxy and Eli Lilly have a joint venture in the US also, which is for marketing of mainly Ranbaxy products in that market. Eli Lilly has plans to expand its clinical research activities in India by undertaking even phase two trials.