New Challenges in Alliance Portfolio Management - Innovation and Marketing in the Pharmaceutical Industry - page 163

study on intrafi rm diversifi cation showed that even two closely linked aspects of
diversity—technological diversity and diversity of therapeutic classes—are empiri-
cally distinguishable and exert differential effects on performance.
Subsequently, I outlined three major challenges that are food for thought for
practitioners and provide research opportunities for academics. A fi rst challenge
relates to competing theoretical perspectives. The traditional learning perspective
may not be the optimal perspective to understand portfolios in a fast-moving fi eld
such as the pharmaceutical industry. The scant empirical evidence does not appear
to be supportive of the assertions that fi rms try to assimilate knowledge from each
alliance and integrate knowledge across alliances. Managerial practice suggests we
need to use a different perspective: option contracts are increasingly popular in the
biopharmaceutical industry. Real options reasoning is bound to gain ground in this
literature. More empirical research on the profi tability consequences of portfolio
diversity is necessary to explain performance differences across fi rms.
A second challenge relates to the need to account for contingencies, as not all
fi rms benefi t equally from similar portfolio compositions. It is insuffi cient to control
for unobserved heterogeneity in an econometric way; on the contrary, the added
value of future research will be more likely situated in making heterogeneity observ-
able. New developments in the absorptive capacity literature may prove helpful, if
concrete factors are derived from these abstract discussions. The explicit study of
dimensions of internal knowledge creation, for example, may help explain why
some fi rms benefi t more from diverse alliance activity than other.
Third, the nature of collaboration in the pharmaceutical industry is changing.
Biotechnology has moved from an emerging paradigm to an accepted source for oppor-
tunity search and problem-solving (i.e., for new drugs); new technological develop-
ments such as in the area of nanotechnology need to be followed up and eventually be
incorporated in the study of alliance portfolios; developments in other industries have
broadened the set of potential partners for pharmaceutical fi rms to include actors in IT,
telecommunications, and the like; and the institutional changes in the healthcare sector
lead to a reconsideration of milestones and targets in individual alliances.

5.5.2 Implications for Managerial Practice

I illustrated that some large fi rms already actively pursue an alliance portfolio strat-
egy in the pharmaceutical industry. For those fi rms that don't, the need to shift from
managing alliances to managing the portfolio of alliances is a fi rst key take-away.
Portfolio studies have shown repeatedly that alliance portfolios do impact fi rm per-
formance above and beyond the impact of the individual alliances. The entire dis-
cussion on technological diversity, for example, is pointless if fi rms shape their
strategies at the alliance rather than the alliance portfolio level.
A second key take-away for managers is that technological diversity occupies
a central place in portfolio management . Diversity is worth pursuing in a