The paper discusses how the Resource-Based View (RBV) can be used as a potential tool for analyzing the competitive advantage of a firm. Taking the example of a leading Indian pharma major, the authors discuss how firm-specific resources have contributed to sustainable growth over the years. The authors explain how this firm’s process of drug manufacturing using project management is evolving. Taking two specific sub-dimensions of RBV, namely, Social Complexity and Causal Ambiguity, the case describes the interplay of the two dimensions. In the highly competitive world of drug manufacturing, speed and cost are of essence, and it is this space that the firm under discussion has been able to exploit. The case goes on to describe the process of drug manufacturing in the organization and demonstrates the process of creating a superior competitive advantage for the client organization and for itself. For the prospective reader of strategy literature, this case demonstrates the importance of RBV in the pharma business and shows how firms in countries such as India are well placed over others in this business.

Indian pharmaceutical industry has made great strides since 1991, with the opening up of Indian economy to the forces of liberalization, privatization and globalization (Rao, 1998). A look at the turnover of the Indian pharma industry shows just how important these forces were to propel growth. As of 2010, the industry turnover stood at 21 bn USD, of which the domestic market contributed 12 bn USD (IMS Health, 2010). The balance 9 bn USD came from exports. Today, India is the fourth largest market by volume and thirteenth largest by value. To add further value to these statistical numbers, India, with more than 175 US FDA-approved manufacturing facilities, is quickly emerging as a global hub for pharma companies to outsource Contract Research and Manufacturing Services (CRAMS) and clinical trials. The Indian CRAMS market was valued at US$2.5 bn in 2009 (12% of overall industry turnover of US$21 bn) and is expected to reach US$8.2 bn by 2014 (Monitor Group, 2009).

Since 2005, pharmaceutical companies in the US and Europe have increased outsourcing of their manufacturing work to India and China. The objectives are not hard to predict—cost and execution speed (Grace, 2004). Another factor for the surge in outsourcing is the enactment of Patent Amendment Act, 2005, which assures the foreign MNCs of protection of their product patent rights in India (Jayashree and Rajesh, 2010).

Given the emerging opportunity that the business presents, it is surprising to note that only a few Indian firms have been able to exploit this opportunity. It appears as though there are reasons that do not allow all firms to exploit the opportunities, largely because of some unique characteristic features (Sampath, 2006). Serving companies such as Pfizer, Merck and GlaxoSmithKline require global standards and resources. These global majors are constantly on the lookout for value appropriation and higher profits. This is only possible if they are able to execute decisions faster than their rivals and at a lower cost. Therefore, it makes business sense for them to outsource the manufacturing work to select firms in India to attain the twin objectives of ‘speed to market’ and ‘lower cost’. The MNC clients prefer this outsourced work to be carried out by the Indian firms in a project mode for better monitoring and control (Garvey, 2005).

Business Strategy Journal, Application, Resource-Based View, Resource-Based View (RBV), RBV, Namely, Social Complexity, Causal Ambiguity, Indian Pharma Multinational, Research and Development (R&D), Indian Pharmaceutical Industry