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Biotech share price is highly volatile, compared to most other industries. There is limited explanation for what causes such a high volatility. The purpose of this study is to explore how R&D strategies selected by biotech firms affect their share price volatilities. Specifically, the paper empirically investigates the impact of drug discovery and development diversification on share price volatility.

Regression analysis is applied to observe the effect of R&D strategy on share price volatility. Share price volatility is regressed on the measure of drug discovery and development diversification. Strategies are classified into two categories: diversified vs. concentrated. Meanwhile, other factors that have an influence on share price volatility such as firm maturity, firm size, and book‐to‐market ratio are controlled. For robustness, a return model is also used to further test the effect of R&D strategy, and sensitivity analyses using alternative drug discovery and development diversification measures are performed. Empirical data was collected for publicly‐traded biotech firms from COMPUSTAT, CRSP and Biospace.

The major finding of this study is the significant impact of R&D strategy in term of drug discovery and development diversification on share price volatility. Firms that have more diversified drug portfolios are associated with lower share price volatilities; and lower stock returns. In contrast, firms that have more concentrated drug portfolios are associated with higher share price volatilities; and higher stock returns.

Future research can explore effects of other aspects of the drug discovery and development as well as other firm attributes on biotech share price volatility. In addition, share price volatility may have impacts on managerial issues such as employee stock option issuance. Such impacts should also be studied.

This study targets a major aspect (i.e. R&D strategy) of the very fundamental value drive in the industry (i.e. drug discovery and development) to shed light on the limited understanding of what contribute to biotech share price volatility. The benefit of produce diversification has been examined in some other industries; however, its benefit is largely unknown in the biotech industry. This study has implications for investor risk assessment and corporate risk management.

The role of intuition receives little attention in the literature on organizational creativity. This paper describes a study of the role of intuition and its implications for organizational creativity within pharmaceutical research. The study applies French philosopher Bergson's philosophy of intuition. The study is based on a series of interviews with employees in pre‐clinical research (discovery) in a major pharmaceutical company; in this context, creativity is defined as an organization's ability to bring forth a new candidate drug in the gastrointestinal and cardiovascular therapy areas. This paper concludes that intuition is a resource that facilitates new drug development. Pharmaceutical researchers perceive the roles of intuition and creativity as intertwined in ground‐breaking innovations. However intuition is a controversial phenomenon in the organization because it opposes reductionistic and analytical forms of thinking, which are highly prized in new drug development. Bergson's philosophy may form a fruitful foundation from which intuition and its relevance for organizational creativity can be exploited.

Researchers continue to seek understanding of industrialization as a state managed process. How to create and implement new industries based on advanced knowledge is on the policy agenda of many advanced nations. Measures that promote these developments include national capacity building in science and technology, the formation of technology transfer systems, and the establishment of industrial clusters. What these templates often overlook is an analysis of use. This chapter aims to increase the understanding of the processes that embed new solutions in structures from an industrial network perspective. The chapter describes an empirical study of high-technology industrialization in Taiwan that the researcher conducts to this end. The study shows that the Taiwanese industrial model is oversimplified and omits several important factors in the development of new industries. This study bases its findings on the notions that resource combination occurs in different time and space, the new always builds on existing resource structures, and the users are important as active participants in development processes.

The study aims to add to the body of knowledge of open source tangible product management (also called open design). The objective is also to develop a guideline for efficient open source tangible product development and adoption.

The exploratory research design using secondary data (like newspapers, magazines, research articles, bogs, papers, etc.) is used to analyze open source tangible product design challenges and enablers. The success stories of Open Source Software projects (OSS) were studied for identification of critical success factors and further their relevancy was tested in the two popular cases of open source drug discovery (malaria and tuberculosis)

Open innovation has become a part of competitive strategy of current businesses. It requires an efficient intellectual property protection regime for its implementation. However, in a market dominated by proprietary benefits, the open source technology development can serve as remedy for innovation needs of neglected sectors. The OSS literature revealed managing two classes of factors, namely technology sponsor level factors and environmental factors for efficiency and effectiveness. The case study analysis in the context of applicability of these OSS critical factors showed their limitations in open source tangible products, and highlighted understanding additional challenges and remedies.

Open source innovation is a collaborative effort involving inputs from various/diverse players, hence monitoring the effort and motivation level of the contributors is a cumbersome task. Only the information that is available online and in print media is taken as research inputs in this work. Also the data taken were from two case studies; a lot more case studies in the open design domain can progress the theory. The implications of this study are far-reaching in the areas where profit motivated proprietary efforts lack in addressing societal need. It provides guidelines for addressing those unmet needs by developing products in a collaborative way without intellectual property hurdles.

The essence of open design is becoming more vital, and there is a pressing need to build theory to support it, which still is elusive and dispersed. The study fills the gap using secondary data and case study approach.

The purpose of this paper is to focus on the adoption of the open innovation paradigm in the bio‐pharmaceutical industry and investigate through which organisational modes (e.g. collaborations, in‐ and out‐licensing) open innovation has been implemented and how these modes are interwoven with the different phases of the drug discovery and development process. Open innovation is currently one of the most debated issues in management literature. Few contributions, however, have paid attention so far to systematically and longitudinally addressing the adoption of open innovation in a specific industry.

A two‐step research strategy has been adopted. First, a panel study of top industry representatives was organised to operationalise the concept of organisational modes of open innovation in the bio‐pharmaceutical industry. Second, the open innovation modes used by the first 20 pharmaceutical biotech firms worldwide have been documented over the period 2000‐2005 in the various phases of the drug discovery and development process.

A framework of analysis, establishing the relations between open innovation modes and the phases of the drug discovery and development process, has been developed and assessed in the industry, allowing the determinants of adoption of different modes and their managerial implications to be discussed and to relate them to the peculiarities of the biotech industry.

The paper contributes to the ongoing debate on open innovation by representing one of the first attempts to systematically and longitudinally assess the extent and particularly the determinants of the adoption of open innovation in a specific industry.

The purpose of this paper is to examine the role of tacit knowledge in incremental innovation, which has hitherto been neglected.

Qualitative case analysis was used to focus on two large Japanese pharmaceutical companies’ development of new antihypertensive drugs. The study uses interview data and documentary research materials to explore the knowledge bases of the companies’ research teams as they refined an existing drug to produce new products – a process of incremental innovation.

Explicit knowledge (chemical structure of preceding drug) was used in both successful and failed cases of drug discovery. In the two successful cases, the tacit knowledge of key researchers, based on their long-term experience of related research, provided insight into developing compounds with good in vivo efficacy, which led to successful clinical development.

The findings suggest that tacit knowledge may play an important role in incremental innovation processes, and that its influence on product development should be considered in such ways as team and organization structure.

This study addresses a gap in the literature regarding the impact of tacit knowledge on incremental innovation processes. It is often assumed that incremental innovation is based on existing technology. This study suggests that tacit knowledge may play a hitherto largely unrecognized role in incremental product development.

The purpose of this paper is to examine meetings as a form of meta-practice and investigate their role related to management control of innovation development.

This research draws on case studies of two biotechnology firms operating in pharmaceuticals and medicine, which represent different contexts regarding the uncertainty and complexity of innovation development.

The study suggests two distinct roles of meetings in the context of innovation development: meetings as regulating and ordering; and meetings as a resource. In the first role, meetings serve as a regulative mechanism that brings together multiple elements of control into a system. Meetings as a meta-practice regulate and order by bracketing elements of innovation in time and space, rendering the innovation process more manageable and allowing actors to handle the complexity of knowledge. In the second role, meetings are used as a resource, sporadically intervening in the ongoing activities of innovation projects. The study explains how these two roles relate to the uncertainty and complexity of innovation development and have different implications for management control.

The study challenges the instrumental view of meetings by taking a closer look at their structuring potential in the organization. Understanding the roles of meetings provides another perspective on the functioning of management control and opens new avenues for studying the practices of control and decision-making.

The purpose of this paper, focusing mainly on India – and a lesser extent on China – is to examine, broadly, two related issues concerning the rise of pharmaceutical industry in the emerging economies: the strategic response of the emerging‐country pharmaceutical firms to the new patent regime that recognizes and enforces product patents; and its implications for multinational enterprise (MNE) strategies.

The paper is based on extensive review of the relevant conceptual and empirical literature and secondary data.

The strategic response of pharmaceutical firms in the emerging economies (India and China, for example,) to the new patent regime is to develop multiple competencies and position themselves to simultaneously compete and collaborate globally with the MNEs – large firms rapidly moving towards discovery and development of new drugs, and medium and small firms engaged in the production of off‐patent generics and contract manufacturing, respectively.

The trend towards greater collaboration between the emerging‐country firms and the MNEs in the new patent regime raises serious concern about prescription drug prices in the developing as well as developed countries. Given the importance of the pharma industry to the health of nations, firms in rich and poor countries alike will continue to come under public pressure to develop and market the needed drugs at affordable prices.

The paper would be of value to practitioners and scholars interested in the implications – for MNE pricing, outsourcing and R&D strategies, for example – of the rapid rise of pharmaceutical industry in the developing countries such as India and China.

This study proposes a strategic and dynamic model for R&D organisations in the Indian pharmaceutical industry, and transfer of knowledge across the rest of the organisation.

This is an exploratory study using the available literature, theories and evidence of companies engaged in different directions in the form of novel types of alliances. Suitable propositions are developed for further study.

The study reveals that location is important in terms of exploiting host countries' competitive advantages. Additionally, a critical mass of resources are critical for meaningful interaction between R&D experts. Both explicit and tacit knowledge need to be diffused and made known to other members of the organisation for maximum benefits.

More extensive studies across a variety of companies are required to validate the findings, particularly comparing the R&D paths of organisations located in multiple countries. Not only big firms but also SMEs could be the subject of further study.

Previous studies concentrated on the conservation, accumulation and recycling of knowledge without considering the interplay of micro and macro factors interacting with “meso” factors. This study takes as its root the assimilation and cross‐fertilisation of technical knowledge, a “create and control mechanism” for an integrated new R&D model, aligning micro initiatives with macro‐level postures at the regulatory levels.

A dominating view in the literature of organizational creativity is to treat the creativity as an ex post facto construct rather than a process that may be subject to systematic and thoughtful managerial practices. Drawing on Alfred North Whitehead's writing, the paper seeks to examine how creativity is conceptualized in the pharmaceutical industry.

This study is based on a series of interviews with managers and scientists in three pharmaceutical companies.

Although researchers and managers designate the role of organizational creativity as the most important strategic capability of the firm, there is almost no communication about it. The respondents point out a gap between understanding and action in the innovation process, i.e. what precedes it in new drug development. This gap is clearly illustrated – creativity is what makes the difference for the companies – but hardly anyone talks about it.

From a management perspective this paper concludes that organizational creativity in new drug development can become a more actionable concept by capturing images and narratives relevant to the organizational reality.

In contrast to the dominated individualistic centered view of creativity, this paper argues that creativity does not occur at a single point in time but is rather the outcome from a series of interconnected events and undertakings. A process‐based view of creativity can thus escape the misplaced concreteness that the mythology of creativity postulates. Whitehead's process philosophy may form a fruitful foundation from which organizational creativity can be understood and exploited.