The intra and inter-firm geography of EMNCs: India’s pharmaceuticals

1. The intra and inter-firm geography of EMNCs: India’s pharmaceuticals Rory Horner Clark University Graduate School of Geography Presentation for ‘Emerging Multinationals’ conference at Copenhagen Business School, October 2008.

2. Layout • Background/context • Intra-firm - How international are India’s big pharma? (sales) - Are Indian pharma establishing operations abroad? (subsidiaries) - How global are manufacturing and R&D? • Inter-firm alliances - How are Indian pharma using inter-firm alliances in their internationalisation? • Conclusions/future research

3. Other developing countries (e.g. Kumar 1982, Wells 1983) 1980s Developing-country FDI Where does developing country-FDI locate? 2000s Developed countries (e.g. UNCTAD 2006)

4. From intra-firm to inter-firm Traditional ‘intra-firm’ e.g. Vernon (1966), Dunning (1988) Inter-firm linkages e.g. Mathews (2006)

5. India’s ‘big pharma’ Source: Business World India’s “BW Real 500: India’s top companies” (2007). HQ location and year established are sourced from company websites and annual reports.

6. Dr Reddy’s: “We began in 1984 and, like some other players of that era in India, concentrated on strengthening reverse engineering capabilities to produce high quality bulk drugs and formulations at low costs, and sell them in the domestic market. Reverse engineering

7. To …. The importance of these skills cannot be exaggerated, for they created the technological foundations for your Company’s successful foray into the international generics market” (Dr. Reddy’s 2002).

8. How international are India’s big pharma? Share of gross revenue from abroad for India’s largest pharmaceutical firms 2002→2007

9. North America Central & South America Africa Europe Rest of Asia Oceania Are Indian pharma establishing operations abroad? Subsidiaries locations 2002 and 2007

10. How global is manufacturing and R&D? • Concentration in India • More manufacturing than R&D abroad • R&D focus in USA.

11. How are Indian pharma engaging in alliances and linkages? • Limited evidence of industry-government-university linkages • Inter-firm linkages have a distinct geography. → 93% with Non-Indian firms → 93% of those with North American or European firms

12. How are Indian pharma EMNCs engaging in inter-firm linkages? • Classification of international inter-firm alliances of India’s top 10 pharma 2002- mid 2008

13. Conclusions and future research • Growing internationalisation, targeting the regulated markets • Proliferation of alliances, yet still strong intra-firm advantage • Sources of Indian advantage? Sustainable? • How will internationalisation of these firms evolve over time? • Importantly, will these EMNCs effectively serve the needs of the base of the economic pyramid?

15. Within India:

16. Within Western Europe and North America

17. Empirical focus: India’s pharmaceuticals • A ‘knowledge economy’ sector • Prominent in the internationalisation of Indian EMNCs • Pharmaceutical industry noted for being alliance-driven (e.g. Birch 2008)

18. Manufacturing by firm

19. R&D by firm

20. Alliances by chronology