PARTNERSHIP AND INNOVATION IN THE LIFE SCIENCES - Innovation in the Biopharmaceutical Industry - page 114

that the knowledge monopolies built by the centralised R&D organisations of the
twentieth century have ended”.
The significance of the contribution to innovation by smaller companies was
confirmed in 1999, when it was found that only 11.6% of US patents were awarded
to the top 20 companies and almost 90% of innovation in R&D (as measured by
patents) was in companies with small patent portfolios. Further, over 35% of all
industrial R&D was performed by companies with less than 5,000 employees, as
compared with 10% in 1981 (Chesbrough, 2003). In parallel, university-based R&D
spending in the US doubled in real terms in the period 1970-1990 (Henderson et al. ,
1994), and the number of patents awarded to universities increased from 250 in 1980
to over 1,500 in 2000 (Thursby and Kemp, 2002).
No coincidence therefore that in the 1980s, the traditional arm's length modes
of interaction gave way to closer collaborations (Chiesa and Manzini, 1998) and
between 1996 and 2000, globally, the number of pharma-biotech collaborations
grew fourfold and by 2000 amounted to 160 alliances. By 2002, approximately 20%
of pharmaceutical products were in-licensed from biotech companies (Richardson
and Evangelista, 2002).
Partnerships have also helped to increase and improve the interaction of technical
specialists from different disciplines, enable linkages of different groups with a
common goal and transfer ideas from other industries (Teece, 1986; Burt, 1992;
James, 1994; Cohen et al , 2002; Hargadon, 2003).
Universities that provide an accessible source of technical specialists across a
broad range of disciplines are playing an increasing role in this respect (Thursby
and Kemp, 2002; Chesbrough, 2003; Debackere and Veugelers, 2005). Internal
partnering arrangements of different groups within a firm also enhance collaborative
and cross-disciplinary working (Brown and Duguid, 2000; Reagens and Zuckerman,
2001).
Methods for decision-making
The literature shows that R&D investment decisions are increasingly shifting away
from allocating resources to inputs, towards activities that optimise production of
new knowledge (Ali et al. , 1993; Dushnitsky and Lenox, 2005). For successful
R&D partnering effective allocation of resources requires careful selection of sup-
plier, design of the product development process and management of the part-
nering project (Krishnan and Ulrich, 2001). Firms align their interests according
to the individual product applications demanded by the market, the technologies
available to them or according to their existing core competencies (Anderson and
Nanus, 1991; Ali et al. , 1993; Brown and Eisenhardt, 1995; Granstrand et al. , 1997;
Sharp, 1997). However, empirical evidence does not identify an obvious method