Motivations for strategic alliances in the pharmaceutical/biotech industry: Some new findings

Abstract

In the pharmaceutical industry, strategic alliances extend worldwide. In this exploratory empirical study of 55 large firms and 54 small firms that are parties to strategic alliances, we investigate the motivations for strategic alliances among small and large licensees and licensors. The findings show that, contrary to expectations, a third of the licensees are small firms. Small biotech firms are more likely motivated by R&D time-span reduction than larger firms seeking strategic alliances. The findings imply that the motivations for strategic alliances in this industry change with time. Unlike in the 1980s, market access was a major motivation for strategic alliances for licensors in early 1990s. Further, compared to the 1980s, the findings show that the need for risk reduction was a more important reason for strategic alliances in the early 1990s. A conclusion of this study is that the “theory of strategic behavior” and “the theory of synergy,” along with firm size and ownership of technology, are collectively able to explain strategic alliances in this industry. New propositions are offered to stimulate future investigations.