‘Biological’ revolution and strategies for innovation in pharmaceutical companies

Abstract

AbstractFundamental advances in the life sciences are exerting a profound influence on the structure of the pharmaceutical industry and the strategies of drug companies. The ‘biological’ revolution makes it possible to apply a scientific method to drug research. This paper argues that pharmaceutical companies can take advantage of the new method only if they encourage ‘openness’ of their research. We also offer a framework to explain why innovations in this industry increasingly result from networks of agents with complementary skills and resources. Greater use of scientific knowledge implies that important information for innovation can be expressed in relatively general and universal forms. This eases information exchange, and encourages specialisation and division of labour in drug R&D and marketing. Finally, the possibility of a division of labour in innovation opens new opportunities for medium‐sized national pharmaceutical firms in Europe. Provided that they found their strategies on high‐quality research in specialised niches, they can set up alliances with partners that possess complementary knowledge, and supply resources for clinical development and international marketing.