Ironic that you chose the one phrase that is discredited by evolutionary biologists and is only used by laymen. As an aside, species do not survive because they are 'fit'; they are considered 'fit' because they survive. Nature doesn't have a standard of 'fitness' and if a tiny proto-rodent survives where a mighty dinosaur couldn't, then the rodent is more 'fit'.
Of course, all of this is irrelevant to the movie debate. Bollywood, like Hollywood, is successful because it is better at selling its products. In the end, that's all that matters and, if Lollywood can increase prominence by forming an alliance with Bollywood, then so be it. As for the quality of movies, neither side has a monopoly on good or bad movies.
Again, you reinforce my point. Product is only one aspect of a marketing campaign and, some would argue cynically, almost irrelevant in the right hands. A good marketer/salesman will sell ice to the Eskimos.
I claim that if you took a Pakistani film and marketed it as a Bollywood product, it would be more successful. Conversely, if any of the Bollywood movies were marketed by Lollywood, they would be flops. I will grant you that, because of the decades of languishing, the Pakistani film industry no longer has top notch talent, but that can be revived in due time, given favorable circumstances...