Inter-firm R&D partnering in pharmaceutical biotechnology since 1975: Trends, patterns, and networks
Introduction
The main purpose of this paper is to present an overview of major long-term trends and patterns in R&D partnering between companies that operate in the high-tech pharmaceutical biotechnology industry. In that context, we study pharmaceutical biotechnology R&D partnerships formed by all companies active in pharmaceutical biotechnology, a population that consists mainly of large pharmaceutical companies, diversified chemical companies, and a range of dedicated biotech companies. The starting point for this analysis is the mid-1970s, when pharmaceutical biotechnology was still at its very early stage of both technological and commercial development. We will follow the development of this emerging sector of industry until the end of the 1990s. The main data source for our analysis is the MERIT-CATI database (see Appendix A).
After we present an overview of general trends in R&D partnerships, which demonstrates a somewhat cyclical growth pattern in the number of newly established partnerships, we will discuss some interesting features of major modes of research cooperation between companies. Traditionally, high-tech companies have preferred to use equity joint ventures as a major mode of cooperation, but gradually they have started to experiment with other forms of cooperation. For pharmaceutical biotechnology, we will look at some trends in the choice that companies make with regard to several modes of research cooperation, such as R&D joint ventures, minority holdings, R&D agreements, and research contracts.
In the next section, we will discuss some major changes in the structure of research partnering networks over time, examining both network-level characteristics and partnering behavior at the level of individual firms. This part of the analysis first concentrates on the representation of actual inter-firm R&D networks formed during five periods of 5 years, beginning with the period 1975–1979 and ending with the period 1995–1999. It presents an intriguing story of networks that are gradually becoming more and more complex, starting as isolated pairs of cooperating companies with a few small clusters of multi-partner networks developing into a very dense, interrelated, large network with a multitude of companies. When we analyze the role played by individual companies, we will concentrate on both large, established pharmaceutical companies and relatively small, entrepreneurial biotechnology firms that are known for having played a crucial role in the development of pharmaceutical biotechnology (see e.g. Arora and Gambardella, 1990, Barley et al., 1992; Pisano, 1991, Powell et al., 1996, Roijakkers et al., 2005). Our analysis will get a clear Schumpeterian flavor when we examine the role of both groups of companies and their individual ‘representatives’ in the changing networks of inter-firm R&D partnering throughout the sub-periods that we study.
In the final section, we will draw some conclusions regarding the main topics of this paper. A number of appendices describe our data and data sources and our own network visualization software tool.
Section snippets
Historical growth pattern
Previous research (see amongst others Chesnais, 1988, Hagedoorn, 2002, Hergert and Morris, 1988, Hladik, 1985, Mariti and Smiley, 1983, OECD, 1986, OECD, 1992) has established that, after a small growth in the number of inter-firm partnerships made during the 1970s, the formation of these partnerships did not really take off until the beginning of the 1980s. We also find this particular growth pattern for the group of partnerships studied in this paper, i.e. pharmaceutical biotechnology R&D
Network evolution
In the previous section, we identified and described a number of important basic developments in biotechnological R&D partnering since the rise of biotechnology in the early 1970s. We now turn to an overview of major changes in the structure of research partnering networks over time, examining both network-level characteristics and partnering behavior at the level of individual firms.
Fig. 3, Fig. 4, Fig. 5, Fig. 6, Fig. 7 give us a graphical representation of R&D partnerships in pharmaceutical
Conclusions
Our analysis of these longitudinal data clearly suggests an overall growth in the number of annually, newly established inter-firm R&D partnerships in the pharmaceutical biotechnology industry since the 1980s. The particular growth pattern, found in the data, is explained by referring to important developments in the availability of venture capital and the influence of large-scale, governmental research projects, such as the Human Genome Program. Over time, companies active in pharmaceutical
Acknowledgements
The authors would like to thank two anonymous referees, participants at the Innogen Conference, Edinburgh, February 2005, the EurotransBio Workshop, Berlin, June 2005, the EGOS Conference, Berlin, July 2005, and participants at seminars at MERIT, Universiteit Maastricht, Vrije Universiteit Amsterdam, and Georgia Institute of Technology for their suggestions and comments on earlier versions of this paper.
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