INNOVATION MODELS IN THE BIOPHARMACEUTICAL SECTOR - Innovation in the Biopharmaceutical Industry - page 6

medicine, physiology, diagnostic techniques and equipment, advances in human
biology, chemistry and other pharmaceutical sciences.
In practice, the modus operandi of the pharmaceutical sector has been charac-
terised by four component parts:

1. Bioscience and medical knowledge creation, from fundamental advances in our
understanding of molecular and cellular structures and processes, to improved
knowledge of disease aetiology and treatment protocols in medical practice.
2. Advances in knowledge which has original and potentially useful applications
which can be patented.
3. Presence of a secure patent position, enabling biopharmaceutical companies to
commit to the long-term, high-risk, high-expense development process. If suc-
cessful, this culminates in a dossier for regulatory approval.
4. The ability to rapidly commercialise the product across world markets and
achieve a commercial return commensurate with the scale of investment and
associated risks.

Figure 1 shows an early linear model of innovation in the pharmaceutical sector.
The figure illustrates the sequential nature of the process, whereby these events take
place, and also the high level of interaction with external agencies and regulatory
systems. The continuing evolution of this process has been largely driven by three
factors: (1) advances in scientific and medical knowledge; (2) a need to ensure
that medicines are safe, effective, and of good quality; (3) the need for companies
investing in R&D over the long-term to achieve a profitable return.

Market
Diffusion

Market
Approval

Product
Development

Research

FDA,
EU Agencies

Hospitals

Pre Clin .

USA

Approval
Package

Clinical
Development

Corporate
Research

Pre Clinical
Development

Reimb/Price
Authorities

Contractors

Europe

Universities

Corporate Activities

Fig. 1. A linear model of pharmaceutical innovation prior to 1990.