From maturity to value-added innovation: lessons from the pharmaceutical and agro-biotechnology industries (original) (raw)
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The modern pharmaceutical industry has always been dominated by a few large pharmaceutical companies, or ‘big pharma’. Until recent times, big pharma has enjoyed success through its integrated approach of exploiting growing scientific and technological know-hows and commercialising high value blockbuster drugs. However, a number of external and internal forces are influencing the value of pharmaceutical innovation, and making big pharma’s growth through integrated innovation model, unsustainable. To sustain growth, big pharma is adapting its innovation pathway, and complementing its model of creating value through new drugs and new markets with one that deliver the perceived value to users including patients, physicians, payers and policy makers. This paper maps the shifting paths of pharmaceutical innovation by examining big pharma’s responses to the forces that are affecting their innovation models. The shifting paths of pharmaceutical innovation have important implications for th...
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Regulation of the Pharmaceutical-Biotechnology Industry
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This paper explored an unusually comprehensive dataset of more than 2,000 drug R&D projects all over the world during the 1990s. This enabled us to characterise several features of the innovation process in pharmaceuticals, particularly the different role and comparative R&D performance of the large established drug companies vis-à-vis smaller high-tech specialist firms the so-called New Biotechnology Firms (NBFs). Our results can be summarised as follows: a) The NBFs are largely an American phenomenon. More than half of the drug R&D projects originated in the US are by NBFs, while almost 90% of the drug R&D projects originated in Europe are from established pharmaceutical firms; b) Collaborative R&D projects are consistently more likely to occur in the US than in Europe. However, in-house projects are a significant majority of the drug R&D projects that entered the clinical stages. c) The established pharmaceutical companies have comparative advantages with respect to the NBFs in drug development (clinical trials). In drug discovery there is no advantage related to scale. Unlike clinical developments, where the large firms seem to have superior capabilities when compared to the NBFs, in discovery there is no inherent superiority (in terms of ultimate probability of success of the compounds) of either the NBFs or the large firms. d) The NBFs are not specialized in more risky R&D projects. In fact, more risky drug projects (i.e. drugs for which there is no or there are few existing remedies) are more likely to be undertaken by the larger pharmaceutical companies. This suggests that scale, market power, and the ability to moblise large amounts of resources are key factors in enabling the firms to sustain such higher risks. e) Other things being equal, the projects originated by the NBFs are more likely to fail in the earlier clinical stages. This suggests that the NBFs perform a good deal of exploration without incurring the higher costs of failing at later stages.
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During the past two decades the biopharmaceutical industry has been facing an innovation deficit, characterized by increasing research & development costs and stagnant productivity. From its inception, biotechnology has been expected to counter this deficit by its revolutionary science-based approach to drug discovery. For this study we gathered patent and product data related to the technological development of the first two biotechnologies: recombinant DNA technology and monoclonal antibody technology. We studied the technological lifecycles of these technologies in terms of scientific discoveries and inventions as well as product innovations. Results indicate that over the years inventions related to these technologies have simultaneously become less radical and less valuable. Furthermore, our analysis shows that these biotechnologies have reached a stage of technological limit or saturation, which may be followed by an innovation cliff. Now, more than ever, it is crucial to examine new strategies and opportunities for value creation, capturing, and delivery, within the biopharmaceutical industry.
Technology Analysis & Strategic Management, 2006
Multinational companies in the life science sector are heavily influenced by government policies and regulations and in turn attempt to influence these actors nationally and internationally. This paper focuses on recent and on-going research, principally on the agro-biotechnology and, to a lesser extent, on the pharmaceutical industries, covering the evolution of policy and regulation in Europe, how policies are influenced by stakeholder pressures and how policy in turn influences company strategies for product development. We focus particularly on new ‘governance’ agendas in Europe and consider the relative impacts of enabling, constraining, discriminating and indiscriminate policies on company strategies as part of our development of an integrated approach to policy and governance. We also consider changes in external operating environments for multinational companies and compare past histories and present pressures on agro-biotechnology and pharmaceutical companies. The paper argues, with evidence, that a more enabling and discriminating policy and regulatory environment can achieve public goals more efficiently and effectively, taking account of impacts on innovation, than more blunt policy instruments. This type of environment takes into account the resources and capabilities available to firms and research laboratories rather than relying on broad brush carrot and stick approaches.