Productivity of the Korean Biopharmaceutical Industry: Exploring the Effect of Business Model and Open Innovation

Abstract

The biopharmaceutical industry in Korea is considered a key strategic industry following the semiconductor industry. However, success in the biopharmaceutical industry depends on the outcome of research and development processes that require long periods and substantial investment, resulting in a success rate of only around 2.5%–4% for new drug development. Consequently, rational strategic choices, such as determining key capabilities to pursue business, deciding where to position within the value chain and identifying collaboration partners and strategies, are more crucial in the biopharmaceutical industry compared to other industries. In this study, we divided Korean biopharmaceutical companies into research and development groups and Integrated groups, which perform both research and production, and compared their productivity using the meta-frontier methodology to verify the significance of technology gap ratio (TGR) values between groups. We also investigated the influence of open innovation activities, including the type, partners and timing, on the TGR of each group with Tobit analysis. The investigation revealed that productivity and its influencing elements varied depending on the business model. This finding suggests that this information can be utilised to develop efficient industrial policies.