New Challenges in Alliance Portfolio Management - Innovation and Marketing in the Pharmaceutical Industry - page 148

Chapter 5
New Challenges in Alliance Portfolio
Management
Stefan Wuyts
Abstract In order to expand the pool of opportunity and access external R&D,
many pharmaceutical fi rms have accumulated portfolios of alliances with other
industry participants over the past decade. Academic research has amply demon-
strated that such alliance portfolios can contribute to fi rm innovativeness and profi t-
ability. Yet, alliance portfolios don't always pay off and much remains to be done to
arrive at a theory of effective alliance portfolio management. This chapter pursues
a number of contributions to this area. First, the author offers an overview of the
key dimensions of portfolio management: scale, partners, governance, technology
diversity, cost, and dynamics. Second, the author singles out the technological
diversity of the alliance portfolio and elaborates on its defi nition and measurement.
Third, the author addresses three challenges that relate to managing technologically
diverse alliance portfolios in the pharmaceutical industry. The fi rst challenge is the-
oretical in nature: the author contrasts two competing theoretical perspectives that
raise different expectations with regard to optimal portfolio diversity, and he moti-
vates why the real options perspective may prove to outperform the learning theory
perspective. The second challenge stems from the observation that not all fi rms
benefi t equally from similar levels of alliance portfolio diversity: the author argues
that such differences across fi rms can be explained by differences in the commit-
ment of managerial resources to implementing a portfolio strategy and by differ-
ences in internal routines and capabilities. The third challenge relates to the changing
nature of collaboration: the evolution of biotechnology as a scientifi c fi eld, the
emergence of nanotechnology, the increasing potential of personalized medicine,
and particular institutional changes such as healthcare reforms have reshaped the
pharmaceutical landscape and require novel approaches to alliance portfolio
management.
S. Wuyts ( * )
Koç University & Tilburg University, Rumelifeneri Yolu 34450 Sariyer, Istanbul, Turkey
Email: [e-mail]