INNOVATION MODELS IN THE BIOPHARMACEUTICAL SECTOR - Innovation in the Biopharmaceutical Industry - page 13

Fig. 4. Typical “investment-income” profile for a single product.

The capability to patent potentially useful new knowledge was dramatically
upgraded in universities during the 1980s and 1990s and played a major role in
facilitating this new form. A more pro-active approach to patent protection and
equity participation in “start-up” companies was adopted by universities and sup-
ported by mixed public funding and venture capital. These were important factors
which encouraged the creation of “spin-off” companies.
Zucker and Darby (1997) studied how one leading pharmaceutical company
transformed its R&D by developing biological drug-design capabilities. New com-
petences were developed by hiring scientists with bioscience skills and establishing
a corporate ethos of continual transformation.
Rothaermel (2001) and Rothaermel and Deeds (2004) have analysed alliances
between small biotech and “big pharma” companies in the USA and concluded that
incumbent big pharma companies exhibit a preference for alliances that leverage
complementary biotech assets for commercial exploitation (exploitation alliances)
over alliances that focus on building new technological competences (exploration
alliances). Biotechnology firms which focus on product technologies depend on big
pharma firms to take them forward into clinical development. However, firms that
have platform technologies rely on a broader range of network relationships which
tend to be less secure (Orsenigo et al. , 2001).
Figure 5 summarises the primary relationships in pharmaceutical R&D as it
exists today. The smaller intermediaries often have a short and tenuous existence
as creators of IP, which they sell to the major pharmaceutical companies at some
stage of early development. In Europe, few of these intermediaries have achieved