Foreign direct investment in Europe by multinational pharmaceutical companies from India

Peter Kedron, Sharmistha Bagchi-Sen

Research output: Contribution to journalArticle

25 Scopus citations

Abstract

This article analyzes European market entry by emerging market multinational enterprises (EMMNE). The theoretical basis of the analysis is EMMNE decisions to operate in advanced nations to exploit and augment ownership-specific advantages. Two Indian pharmaceuticals, Ranbaxy and Dr Reddy's, are used as evidence to support arguments in the literature. Indian pharmaceutical companies originated as generic manufacturers but succeed in European markets by simultaneously pursuing multiple foreign operations motivated by asset augmenting and asset exploiting goals. Dr Reddy's and Ranbaxy use a repetitious cycle of earning (e.g. asset exploitation through generic sales) and learning (e.g. asset augmentation through acquisition of product pipelines, technology) to achieve market growth. That is, past European operations support present entries into new markets, which facilitate future entry strategies across the value-chain (e.g. upstream into R&D). This article contributes to our understanding of interdependencies among firms, markets and institutions and our knowledge of EMMNEs and FDI.

Original languageEnglish (US)
Article numberlbr044
Pages (from-to)809-839
Number of pages31
JournalJournal of Economic Geography
Volume12
Issue number4
DOIs
StatePublished - Jul 1 2012

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Keywords

  • Emerging market multinational enterprise (EMMNE)
  • Europe
  • Foreign direct investment
  • Indian pharmaceuticals

ASJC Scopus subject areas

  • Geography, Planning and Development
  • Economics and Econometrics

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