A shift to external alliances for product development in the pharmaceutical industry

A shift to external alliances for product development in the pharmaceutical industry For a number of years, pharmaceutical companies have been departing from a tradition of strict vertical integration, looking to external sources for at least some of their novel technology and products. The aim of this study was to determine whether (1) this is a long term, industry‐wide trend, or (2) merely a temporary or local response to acquire the technical capabilities of the biotechnology revolution of the 1970's, after which, with the new generation of technology in‐house, they will revert to primarily in‐house innovation. Analysis of secondary data on a representative sample of the fifteen largest drug companies in the United States, the United Kingdom, Germany and Switzerland indicated that between 1977 and 1987, these pharmaceutical companies increased their external R&D alliances nearly six‐fold on average. A large and growing proportion of pharmaceutical companies’ R&D alliances are formed with biotechnology firms which have proprietary technology, due to financial and innovative pressures. Far from being temporary, this resort to external sources of technology in the pharmaceutical industry follows the trends of the wider industrial world towards functional specialization. Thus, biotechnology companies are increasingly taking on the role of suppliers of innovation. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png R & D Management Wiley

A shift to external alliances for product development in the pharmaceutical industry

R & D Management, Volume 24 (3) – Jul 1, 1994

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Publisher
Wiley
Copyright
Copyright © 1994 Wiley Subscription Services, Inc., A Wiley Company
ISSN
0033-6807
eISSN
1467-9310
DOI
10.1111/j.1467-9310.1994.tb00877.x
Publisher site
See Article on Publisher Site

Abstract

For a number of years, pharmaceutical companies have been departing from a tradition of strict vertical integration, looking to external sources for at least some of their novel technology and products. The aim of this study was to determine whether (1) this is a long term, industry‐wide trend, or (2) merely a temporary or local response to acquire the technical capabilities of the biotechnology revolution of the 1970's, after which, with the new generation of technology in‐house, they will revert to primarily in‐house innovation. Analysis of secondary data on a representative sample of the fifteen largest drug companies in the United States, the United Kingdom, Germany and Switzerland indicated that between 1977 and 1987, these pharmaceutical companies increased their external R&D alliances nearly six‐fold on average. A large and growing proportion of pharmaceutical companies’ R&D alliances are formed with biotechnology firms which have proprietary technology, due to financial and innovative pressures. Far from being temporary, this resort to external sources of technology in the pharmaceutical industry follows the trends of the wider industrial world towards functional specialization. Thus, biotechnology companies are increasingly taking on the role of suppliers of innovation.

Journal

R & D ManagementWiley

Published: Jul 1, 1994

References

  • Strategic alliances between large and small research intensive organizations: experiences in the biotechnology industry
    Forrest, Forrest; Martin, Martin
  • External linkages and innovation in small and medium‐sized enterprises
    Rothwell, Rothwell; Dodgson, Dodgson

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