New Challenges in Alliance Portfolio Management - Innovation and Marketing in the Pharmaceutical Industry - page 162

targeted treatments (Aspinall and Hamermesh 2007 ). Such a development may have
consequences for optimal portfolio management. Technological uncertainty cou-
pled with resource restrictions will likely continue to motivate pharmaceutical fi rms
to take options on alternative technologies. However, once select options are exer-
cised, their exploitation may differ if the desired outcome is no longer a one-fi ts-all
drug but a series of variants on a particular treatment.

Industry and institutional change . Pharmaceutical fi rms are confronted not only
with scientifi c developments but also with a changing industry environment. Recent
developments in IT and telecommunications have stimulated pharmaceutical fi rms
to forge alliances with players in other industries (Ernst & Young 2010 ). To obtain
a full picture of a fi rm's alliance portfolio, researchers as well as managers will have
to look beyond the biopharmaceutical industry. Possibly, new portfolio constella-
tions will consist of multiple sub-portfolios (e.g., sub-portfolios in biotechnology,
nanotechnology, and ICT), bringing additional complexity to resource allocation
decisions. The risk for unwieldy management structures (Goerzen and Beamish
2005 ) as well as the need for top management guidance and strong internal routines
and capabilities may become even more pronounced.
Finally, the alliance literature has been remarkably silent on the role of the insti-
tutional environment. Yet, future research on alliance portfolios may need to account
for the dramatic changes that the institutional environment is experiencing, at least
in the United States. To give one example, healthcare reforms have changed the
nature of individual partnerships where contractual milestones that were previously
related to clinical-trial outcomes only, now often also relate to commercial targets
(Ernst & Young 2010 ).

5.5 Conclusion

I conclude with a recapitalization of insights and a discussion of implications for
managers and academicians with an interest in the pharmaceutical industry.

5.5.1 Recap

The study of alliance portfolios in the pharmaceutical industry remains a topic of
high importance. This chapter focused on the key role of technological diversity in
alliance portfolios. As a cautionary note, I pointed to the diverse facets of diversity
and the need to carefully select the type of diversity to be studied and to select an
appropriate measure. This message may not come across as thought-provoking. Yet,
the gap between construct and measures in the previous literature is worrisome
because some of the measures used to capture technological diversity also captured
other theoretically relevant constructs (e.g., tie strength and partner diversity). Such
confounds complicate the derivation of generalizations. An excerpt from a research