US market entry processes of emerging multinationals: A case of Indian pharmaceuticals

This paper examines the foreign market entry strategies used by Indian pharmaceuticals to enter the United States. We use Dunning’s eclectic theory and its extensions to develop an understanding of how firm-specific and location-specific advantages are combined to exploit (e.g., sales in the US) and augment (e.g., access to R&D) assets by Indian pharmaceuticals. Two pharmaceuticals with significant market presence in the United States are used as cases: Ranbaxy and Dr. Reddy’s (DRL). Our findings suggest that Indian pharmaceuticals employ multiple strategies adjustable to changing internal and external conditions in order to gain a foothold in the United States. Market entry is not a one-time operation; Indian pharmaceuticals continually reassess their entry strategy and consider it within a wider combination of simultaneous strategies. For example, exporting a generic drug formulation into the US after a legal battle with an incumbent competitor does not inhibit acquisitions in complimentary drug markets, or preclude present or future research partnerships with that same incumbent company. The pursuit of multiple strategies at the same time allows developing country multinationals to succeed in the United States as latecomers compared to other generic manufacturers, domestic and foreign, who have their operations for a much longer period of time.

Research highlights
► US contexts influence firm-specific exploitation and augmentation strategies.
► Indian pharmaceuticals use multiple entry strategies to overcome latecomer disadvantages.
► Foreign company US entry strategies are integrated to exploit and augment assets.
► Interactions of company strategies may be reinforcing or may weaken competitive position.