INNOVATION MODELS IN THE BIOPHARMACEUTICAL SECTOR - Innovation in the Biopharmaceutical Industry - page 9

as complementary assets. Such an outlook can have the unfortunate result of fos-
tering a view that for this sector, market diffusion through educational information
programmes and marketing, is just an “optional extra” rather than, as in the third
definition above, an essential, integral part of the innovation process.
Similarly, in business models which are used both for decision making in the
industry and for evaluating the impact of government policies and regulation, there
is scope for setting systems' boundaries at different levels. Hence, there are different
ways to define innovation and business models, depending on the boundaries chosen.
These will be explored further below.

Classification models
Freeman (1982) proposed a classification system based upon degrees of innova-
tion — revolutionary, radical or incremental — as shown in Table 2. Many have
drawn on this typology to describe pharmaceutical innovations. For example, the
term “revolutionary” innovations can be used to describe major conceptual advances
such as the identification of microbes and classes of anti-infection agents, which
emerged in the second long-term bio-wave.
The distinction between “radical” and “incremental” innovations offers a conve-
nient approach to making more subtle distinctions. For example, a new understand-
ing of a disease mechanism and a new mode of action which interferes with the
disease process at a molecular level can be described by the term “radical” innova-
tion. Within this envelope, however, alternative molecules developed with different
attributes, which offer value in treating particular disease variants or patient seg-
ments, can be referred to by the term “incremental” innovation.
In practice, based upon different patterns of patent ownership, companies simul-
taneously engage in a competitive race to develop new products which all have the
same mode of action (Landau et al. , 1999). This makes it difficult to use the terms
“radical” and “incremental” to distinguish between individual products. The entry

Table 2. Types of biopharmaceutical innovations.

Radical Revolutionary

New disease treatment mechanisms
and families of closely related
chemical or biological products

Major therapeutic models e.g.
anti-infectives based on biotechnology

Incremental Technology system change

Individual new products and
formulation variants

IT based pharma R&D systems,
Genetic profiling, modern ITC
systems, diagnostics