strategic alliance战略联盟Eli Lilly.docx

strategic alliance战略联盟Eli Lilly.docx

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strategicalliance战略联盟EliLilly

CONTENT

ExecutiveSummary1

1.Introduction1

2.DriversofStrategicAlliance2

3.MainProblemsofStrategicAlliance5

4.Conclusion7

5.References8

ExecutiveSummary

Thetermofstrategicallianceisdefinedas“avarietyofinterfirmcooperationagreements,rangingfromsharedresearchtoformaljointventuresandminorityequityparticipation”（Barlettetal2008;560）.CullenandParboteeah（2005;259）definedinternationalstrategicalliancesare“cooperativeagreementsbetweentwoormorefirmsfromdifferentcountriestoparticipateinbusinessactivities”.Inkpen（2001）summarisedthreefeaturesofstrategicalliances.Firstly,thetwoormorepartnerfirmsremain“independentsubsequenttotheformationofthealliance”（Inkpen2001;403）.Secondly,alliancesarebaseduponmutualinterdependence,whichmeansonefirmiseasilyinfluencedbytheother（Parkhe1993）.Finally,onefirmisuncertainabouttheotherfirm’sactionduetotheindependentpositionsofeachfirm（Powell1996）.Therearevariousreasons/driversgivingrisetotheformingofstrategicalliancesandanumberofproblemsmaybeencounteredduringtheprocessofalliancemanagement.ThisreportwilldiscussthesedriversandproblemswithreferencetothepharmaceuticalcompanyofEliLilly.Inthefirstpartofthisreport,thecompanyofEliLillywillbeintroducedbriefly.Then,driversofstrategicallianceswithinthecompanywillbecriticallydiscussedfollowedbyananalysisofthemainproblemsencounteredinthealliances.

1.Introduction

EliLillyandCompanyisaglobalresearch-basedpharmaceuticalcompanywithmorethan130years’historyheadquarteredinIndiana,US.Itisconductingclinicalresearchinmorethan50countriesandmarketingproductsin143countrieswithapproximately38,350globalemployees（EliLillyandCompany2011a）.Thecompany’smissionisto“discover,develop,andcommercializeinnovativepharmaceuticaltherapiesthatenablepeopletolivelonger,healthier,andmoreactivelives”（EliLillyandCompany2008）.ThankstohighersalesofAlimta,Cymbalta,Humalog,ZyprexaandErbitux,thecompanyachievedtotalrevenueof$21,836millioninthefiscalyearof2009,increasedby7.2percentthanthefiscalyearof2008,（Datamonitor2010）.Atthesamefiscalyear,itsoperatingprofitreached$5,587.3million（ibid）.

Activeinnovation,advancedresearchandsuccessivelaunchofnewpharmaceuticalproductsarecrucialtotheoperationofEliLilly’soperation.AsthepresidentandCEOofEliLilly,JohnLechleiter,putit“Lilly'snumber-onepriorityisincreasingtheflowofinnovativeproductsthatmakearealdifferenceforpatients.Partneringhasbeenakeyelementofourstrategyformorethanadecade,andsuccessfulpartnershipsareessentialforLilly'songoingpursuitofinnovation”（EliLillyandCompany2008）.SeniorVicePresidentofthecompany,GinoSantiniechoedtheimportanceofthepartnershipbysayingthat“dynamicpartnershipsareatworkacrossLilly’sentirevaluechain…successfulalliancesbroughtproductslikeActos,ByettaandCialistomarket”（EliLillyandCompany2011b）.

EliLilly’straditionofstrategicallianceswithselectedpartnershasplayedanintegralroleincreatinginnovativeproducts,boostingthecompany’sgrowth,andmaintainsthecompetitiveadvantageintheworldmarket.

2.DriversofStrategicAlliances

Thedriversormotivationsofstrategicalliancesarediscussednumerouslyinallianceliterature（e.g.Campbell2004;CullenandParboteeah2005;Gulati1998;Inkpen2001;OsbornandHagedoorn1997;PorterandFuller1986）.

Thereareseveralgeneraldriversunderlyingstrategicalliances.Itisgenerallyagreedthatstrategicalliancepartnersarelikelytoleverageresourcesandcorecompetencesbetweentheminordertoimprovetheirbusinessperformanceandspecialiseintheirowncompetencies.Forinstance,nearly100yearsago,BantingandMacleoddiscoveredinsulinandpatentedtheirinsulinextract.Then,theydevotedalltherightstotheUniversityofToronto.AlliancepartnershipwiththeUniversityofTorontohelpedEliLillytoproducethefirstcommercialinsulinproductintheworld（EliLillyandCompany2011b;Nobelprize.org2011）.About60yearslater,humaninsulinwasgeneratedbythebiotechnologycompany,Genentech.In1982,EliLillyobtainedthelicensefromGenentechandlaunchedhumaninsulinproductintothemarket（TheMotleyFool2011）.Inbothexamples,EliLillyuseditsproductioncapabilitiestocombinewithpatentandlicenseoftheUniversityofTorontoandGenentechtobringtheinsulinproductsintothemarket.Hencecorecompetencesandresourcesofpartnerswereleveragedtoachievethesynergyandbenefitedtobothpartnersofalliancesasaresult.DeWitandMeyer（1998）presentedotherpotentialsourcesofresourceleveragingthatmayboosttheformingofalliances,includingbargainpoweragainstcustomersorsuppliers,relationswithdistributors,marketingresourceandfinanceresource.AnotherexampleisthealliancebetweenEliLillyandIndia-basedPiramalLifeSciences.Inthispartnership,Lillygainedtheimprovementofproductivityindrugdevelopmentleadingtoanincreaseincorecompetenceforthecompany（EliLillyandCompany2008）.

Spreadingandreducingcostsisanotherimportantdriverformanystrategicalliances.Lilly’spartnershipwithBelgium-basedGalapagostocooperateinthefieldofosteoporosiswiththeircomplementaryexpertise.Currently,Galapagosisundertaking12osteoporosisdrugdiscoveryprograms.EliLillysharedthecostsandrisksintheprocessoftestinganddrugdiscoveryinthispartnership（EliLillyandCompany2008）.AnotherexampleistheAmylin/LillyAlliance.In2002,EliLillyandAmylinPharmaceuticalssignedastrategicagreementandformedthealliancededicatedtoresearchonatreatmentoptionfordiabetes.Accordingtheagreement,LillyandAmylinincurredthetotaldevelopmentandcommercializationcostsequallyinsidetheUS.WithregardtocostsoutsidetheUS,thetwocompaniessharedthedevelopmentcostsequallybutLillyhadtotakethecommercializationcosts（EliLillyandCompany2011c）.AsthepharmaceuticalresearchneedsagreatdealofinvestmentandLillyisinvolvedwithanumberoffieldsofdrugdeveloping,alliancepartnerscanshareandspreadtheR&Dcostsandrisksforthecompanyandenhancethefeasibilityofresearchasthesametime.

Tolearnknowledgefromapartneralsocanbeageneraldriverofstrategicalliances.KyowaHakkoKogyoCo.,LtdisaTokyobasedcompanywithacancertherapy,aninhibitorofthemitotickinesinEg5.LillyenjoysexclusivelicenseofthecompoundandhavetherightstodevelopandmarketitintheworldmarketexceptinJapan（EliLillyandCompany2008）.Inthisalliance,Lillyacquiredtheaccesstopreclinicalprogramthattargetonavarietycancersandthegreatopportunitytogainknowledgeononcologycapabilitiesandexpertise（ibid）.StrategicallianceisacrucialstrategyofEliandLilly.Thisstrategyenablesthecompanytoparticipateinnumerousfieldsofpharmaceuticalresearchandmarketitsproductsallovertheworld.Throughawiderangeofallianceswithdifferentresearchinstitutionsindifferencefields,thecompanygainedagreatamountofknowledgeandenhancedtheresearchcapabilitysignificantly.Additionally,inordertomarketitsproducts,thecompanyalsohaspartnershipwithmanycompaniesfromlocalmarket.Throughcooperation,thecompanylearnedthelocalmarketknowledgeaswellascultural,politicalandeconomicdifferences.

Inadditiontoabovethreedrivers,companiesmaybestrategicallyalliedtoavoidorcountercompetition.Somemarketcanonlyaffordcertainnumberofcompetitors.Thus,competitorcompaniesmayallytoavoidfiercecompetitionortwoormorefirmsmayformstrategicalliancestocompetewithmarketleaders.Moreover,strategicalliancesmayaimatsecuringverticalandhorizontallinks.Verticalalliancescanhelpfirmsensuretheirsupplyandincreasetheefficiencyacrossthevaluechainwhilehorizontalallianceleadstoefficiencyinexistingdistribution.

Inadditiontogeneraldrivers,therearesomemoredriversforinternationalstrategicalliances.Strategicalliancescanhelpcompaniesgainlocation-specificassets.Inthisway,companiesarelikelytoovercomecultural,political/legal,competitiveandeconomicbarriers.In1992,LillyformedajointventurewithRanbaxyLaboratoriesLimited,India,focusingonmarketingLilly’sproducts（Barlettetal2008）.Thejointventurewasestablishedwithequalcapitalcontribution,equityshare,boardofdirectorsandmanagementcommittees.WiththisjointventurewithIndiancompanies,LillyobtainedtheassetsinIndiaandsuccessfullyovercamethelegalconstraintsfromtheIndiangovernment.Thisisbecauseatthattime,foreignownershipcompaniesarenotallowedinpharmaceuticalindustryinIndia.Therefore,LillygotaccesstotheIndianmarketbyformingjointventurewithRanbaxytoovercomelegalbarriersaswellasculturalbarriers.Furthermore,LillycanlearncertainmarketingknowledgefromtheIndiancompany.

Strategicallianceisoneofcompanies’preferredentrymodelstoexpandintooverseasmarket.Throughstrategicalliance,companiescanspreadtheirassetsacrossbordersquicklyandsmoothly,whichfacilitatecompanies’geographicallydiversification.Furthermore,strategicallianceshelpcompaniesreduceriskswhentheystepintotheforeignmarketsforthefirsttime.

3.MainProblemsofStrategicAlliances

Inthecollaborationprocessofstrategicalliance,differencesinnationalandcorporationculturesmaygiverisetoincompatibleoperationsorconflictingevaluationsof