Biosimilars in Germany: the emergence of a new industry in the light of the varieties of capitalism approach

ABSTRACT

Although lagging behind the USA in biologics, German firms are forging ahead in the emerging field of biosimilars. This development confirms earlier explanations of the differences in these industries given by the Varieties of Capitalism approach. With the recent differentiation in biopharmaceuticals, again, the differences in the institutional environment on both sides of the Atlantic are responsible for different dynamics. However, this time German companies are in the better position: the industry refers to a tradition of engineering capabilities in chemicals and pharmaceuticals. Additionally, European regulation introduced the world’s first regulatory framework, which moreover is designed in a progressive way concerning market admission.     

Policy, Markets and Knowledge: Strategic Synergies in Indian Pharmaceutical Firms

This paper addresses the question of how Indian pharmaceutical firms have transformed themselves from reverse-engineering firms focused on the domestic market to research-driven firms with global presence. It analyses the crucial and changing role of national, then international, innovation and regulatory policies and their impact on growth, performance and technology evolution of Indian pharmaceutical firms. The paper argues that although public policy increased market turbulence, it also provided new opportunities for firms to expand and build new technology, knowledge and market capabilities. From the 1950s Indian firms have pursued a variety of research, marketing and internationalization strategies to tackle changes prompted by policy, markets and knowledge complexities. The paper traces firm strategies that vary both in time and by firm, and argues that the successful firms have evolved substantively towards knowledge-based strategies. The paper then attempts to identify future directions for strategy, knowledge and markets.     

Developing exploitative and exploratory capabilities through capitalising on alliance orientation

ABSTRACT

Researchers suggest that firms should acquire resources from external environments by adopting alliances to enhance their abilities in developing their core value-creating capabilities. However, the question of how to manage alliances effectively through organisational development in exploitation and exploration capabilities has not yet been examined in detail. Using primary data obtained from 159 R&D managers in Taiwan's electronics industry, this study focuses on the specific mechanisms of alliance orientation (AO) and examines its impact on the development of exploitative and exploratory capabilities. We find that AO enables firms to improve their exploitative and exploratory capabilities. Furthermore, unabsorbed slack resources strengthen the positive effects of AO on exploratory capabilities, while market uncertainty weakens the benefits of AO in both exploitative and exploratory capabilities. The positive effects of AO on exploratory capabilities are also weakened by technological uncertainty. These findings provide strategic insight into strategic alliances and the capability development of firms.     

Effect of new product alliances on building cross-functional capability: cross-fertilisation or cannibalisation?

ABSTRACT

The extant literature has focused mainly on how establishing alliances helps firms develop their capabilities within focal functional areas, while paying limited attention to the cross-functional effects of alliances. Drawing on the knowledge-spillover literature and resource-dependence theory, this study investigates the effects of new product development (NPD) alliances on building cross-functional capabilities, testing the influences of important organisational, strategic, and environmental contingencies. Based on survey data collected from 212 Chinese firms, the findings reveal that, for resource-abundant firms, R&D-focused NPD alliances have cross-functional fertilisation effects on marketing capabilities; whereas for resource-constrained or highly innovative firms such alliances cannibalise marketing capabilities; in dynamic markets, marketing-focused NPD alliances cross-fertilise technological capabilities, but such an effect is weaker in firms adopting a highly incremental innovation orientation. Overall, this study sheds new light on how NPD alliances affect cross-functional capabilities under important contingencies.     

Indigenous technological capabilities,emerging market firms and the aerospace industry

While emerging market economies have developed significant technological capabilities and increased their share of global value-added in aerospace, they have done so largely through utilising foreign direct investment (FDI) and offset arrangements to enter supply chains that remain dominated by European and American firms. The paper examines whether emerging markets are developing indigenous technological capability in aerospace technologies. Drawing on patent data from the Thomson Innovation database, the study seeks to understand whether anchor tenant capability is indeed forming in emerging markets. A tech-mining method is applied. The study suggests that China, in particular, has dramatically increased its innovative capacity in the area. However, the data also demonstrate the significant advantages enjoyed by incumbent firms from Europe and the USA, suggesting that the complexity of aircraft R&D remains a formidable barrier that can only be surmounted by determined government policies and anchor firms equipped with substantial innovation capabilities.     

A Resource-based View of Innovativeness in Small Firms

The resource-based view is presented here as the theoretical framework for empirical research on the determinants of technological innovativeness in small firms. These determinants include the characteristics of the owner/manager (O/M) and the firm and some technological assets (resources and capabilities). Evidence based on case studies is used for the evaluation of their effect on innovativeness and their interaction. The study highlights the key role of the O/M and the importance of some of his/her characteristics. It also shows the impact of certain resources and capabilities. The O/M emerges as the orchestrator of resource accumulation and capability development in the innovative firms.     

Transforming the Energy System—the Evolution of the German Technological System for Solar Cells

To improve our understanding of processes involved in the formation and growth of new technological systems in the energy sector and to identify the associated key challenges for policy makers managing the transformation process, we examine the development of the German technological system for solar cells over the past 25 years. We use a "technological system' approach in which we will trace the evolution of actors, networks and institutions that have a bearing on the generation and diffusion of solar cells. An initial preparatory stage lasted until about 1989 and was mainly characterized by knowledge build-up induced by a Federal RDD programme. This was followed by a second stage characterized by political struggle over the regulatory framework and a subsequent beginning of a virtuous circle for solar cells. In the concluding discussion, we emphasize four key features of the evolution of the technological system: (1) the role of a coalition of system builders that successfully influenced the regulatory framework so that markets could be formed: (2) the considerable length of the learning period and the large number of actors that need to learn; (3) the importance of policies that form early markets (not only early niche markets, but beyond those) as only markets may induce firms to enter and learn, and (4) the need to run market formation policies simultaneous to policies that maintain technological variety.     

Middle-ground players in dynamic imitative markets: global entry strategies of Korean firms in the biosimilars market

ABSTRACT

This study examines the strategies used to enter the biosimilars market – the emerging biogeneric market – by five Korean biopharmaceutical firms. The analysis is based on a conceptual framework that characterises the use of imitative innovation by middle-ground firms. These middle-ground firms are positioned between globally innovative firms from major developed economies and latecomer firms from large emerging economies. The study finds that the five Korean firms used three entry modes that resemble the typology of strategies commonly used in the previous catch-up stage: exploiting scale economies and specialisation. The study also reveals the risk and potential of each entry mode.     

Sunk Costs,Firm Heterogeneity,Export Market Entry and Exit: Evidence from India

This paper analyses the role of sunk costs and firm heterogeneity in firm decision to enter and exit export markets. Employing rich firm-level data on Indian manufacturing firms, the study points out that sunk costs in terms of previous export experience significantly explain entry and exit decisions of firms in the export market. The first set of analysis involves estimation of dynamic discrete choice model using random effects probit correcting for initial conditions problem. We find evidence that previous export experience (sunk costs) matters for export decision. However, importance of sunk costs is found to depreciate rapidly. Further, analysis across sub-sample of firms accounting for firm heterogeneity factors like size and product level information supports the hypothesis of sunk costs. Second set of analysis involving firm survival in export markets using discrete-time hazard models shows evidence of negative duration dependence. We observe that those firms which continue to export for few years are less likely to exit from export markets.

     

From Imitation to Innovation: The Evolution of R&D Capabilities and Learning Processes in the Indian Pharmaceutical Industry

Since the mid 1990s the Indian pharmaceutical industry has emerged as a leading supplier of generic drugs to both developing and developed countries.The movement of the Indian pharmaceutical industry along the R&D value chain represents a remarkable shift from an importer to an innovator of drugs. The Indian government's industrial and technology policies along with changes in regulation of intellectual property rights played a crucial role in shaping this development of R&D capability. Using the 'capability creation model' this paper discusses the learning processes and stages involved in this dramatic accumulation of technological capability. This analysis shows that the Indian pharmaceutical industry has followed a trajectory from duplicative imitation to creative imitation to move up the value chain of pharmaceutical R&D. Finally as a result of changes in patent law the industry is learning to develop capabilities in innovative R&D. The basic and intermediate technological capabilities gained from imitative learning gave these firms a solid base for development of competence in advanced innovative R&D. These findings have implications for government policies as well as firm strategies in other developing countries albeit with some limitations due to global harmonisation of patent laws being promoted by the World Trade Organization.     

Imitation and innovation new biologics,biosimilars and biobetters

ABSTRACT

Biopharmaceutical drugs are the future of the pharmaceutical industry. The United States is the world leader in the development of new biopharmaceutical products. These original new drugs, numbering close to 200, are now losing patent protection and imitators from several countries are entering the markets of comparable drugs, called biosimilars. Some companies are improving the original product, and these drugs are called biobetters. Even among the producers of biosimilars one finds different strategies, and these are linked to different government regulations concerning the approval of these products. Some biosimilar companies are aiming at developed-country markets (North America, the European Union and Japan), while other producers are targeting emerging, less-regulated markets. This introduction will present the dynamic picture of an industry in transition. The paper has a double aim: discuss the fuzzy frontier between imitation and innovation, and track the new contours of the pharmaceutical industry.     

Innovation strategy of local pharmaceutical firms in Korea: a multivariate analysis

This article examines 37 local pharamaceutical firms in Korea to identify different patterns of innovation behaviour associated with four types of firms, which are categorized by two variables: the scale of operation and technological capability. Both bivariate and multivariate analyses support the hypotheses that these four types of firms exhibit different innovation strategies and in turn the level of performance they achieved. Specifically, large firms with high technological capability diversify their efforts, investing in their own R & D and tapping foreign capabilities, and as a result exhibit the highest degree of innovativeness, while large firms with low technological capability resort primarily to the transfer of foreign technology for short-term profitability. In contrast, small firms with high technological capability rely mainly on their own R & D efforts with the assistance from local R & D institutes and enjoy the highest growth rate, whereas small firms with low technological capability imitate technologically low-grade products by hiring experienced technical personnel from other firms. There are also fragmented indications that many local firms have long evolved from small firms with low capability to large firms with high capability. Finally, managerial and theoretical implications for the innovation strategies in LDCs/NICsE are discussed.     

Building Technological Capabilities In A Liberalising Developing Economy: Firm Strategies And Public Policy

As a consequence of economic reforms, the Indian manufacturing sector faces a variety of technology related challenges. It not only has to quickly develop world-class manufacturing capabilities, but also gear up to develop new products and processes. In this paper we analyse the technology strategies of six Indian firms in different product groups which are trying to build competitive manufacturing and technology capabilities. The linkages between corporate, technology, and manufacturing strategies are explored and the role of complementary assets is studied in order to identify patterns through which these firms are building capabilities of various kinds. Specifically, we evaluate the extent to which firms use supply chains to develop product and process technologies. Some links between public policy and firm level technological capabilities are also explored to identify a few key priorities in the current context     

Risks and opportunities for the progress of digitalization in Mexico

ABSTRACT

The aim of this research is to identify Mexico’s current conditions for the incorporation of the changes derived from the processes of increasing digitization into its productive sector, called Industry 4.0. To achieve this goal, this work uses the results obtained from a survey questionnaire answered by qualified technological and productive informants with the purpose of identifying the perspectives of firms initiating this transformation. The selection of information units was based on a theoretical sample (not statistically representative), a methodological feature that forced us to analyze carefully the data collected. The results reached show that, from the perspective of the actors involved, the innovative structure in Mexico presents serious limitations in terms of technical and organizational capabilities of the firms to incorporate digital technologies in their production processes. This paper proposes a first exploratory analysis on the visions of Mexican firms and intermediary organizations that deals with the increasing technical and organizational challenges of the new digital technologies. This article provides analytical and empirical inputs for the analysis of the opportunities that Mexican firms have to incorporate these new technical trends. Finally, the work highlights critical institutional and governance aspects for the debate of national industrial and innovative policy agendas.     

Two-way relationship between innovation and market structure: evidence from Indian high and medium technology firms

ABSTRACT

This study analyses a two-way relationship between innovation and market structure in Indian high and medium technology firms. We perform an empirical analysis based on a simultaneous equation model on data for 991 high and medium technology firms during 2000–2015. Patent applications and patent grants capture innovation activity of the firms. We find that the market structure has an insignificant impact on innovation. A separate analysis of neck-and-neck firms also suggests that market structure has no impact on innovation. On the other hand, patenting has a positive and significant impact on market structure in both high and medium technology firms. The study concludes that in-house technology creation is a vital source of market dominance in Indian high and medium technology firms.     

From information technology to bioinformatics: Evolution of technological capabilities in India

This paper explores a trend in the development of innovation in emerging economies: exaptive technological capabilities. A growing proportion of innovation is originating in emerging economies that, being resource-constrained in a dynamic and uncertain environment, requires leveraging existing capabilities and recombining with new knowledge resources. An evolutionary biology model is applied to a process model whereby initial technological capabilities are renewed by the firm given an external selection event. Using a detailed case study across 6 years, this paper investigates the exaptation process of Information Technology (IT) capabilities into bioinformatics by an Indian IT firm, Tata Consultancy Services (TCS). Findings suggest that just leveraging existing technological capabilities alone is a model set for failure. Such a tactic ignores the environment of the new technology application area. By investing in the needed complementary resources, TCS corrected its initial path to open source their software and offer consulting services on how to utilize the software and, thus, create intellectual property. These insights are valuable not only for the innovation management of traditional IT services to life sciences, but more broadly for firms in emerging economies that hope to renew and build exaptive technological capabilities to enter unforeseen new application areas by leveraging existing technological capabilities.     

在位企业如何开拓新技术市场:商业模式与组织身份共演视角

新技术带来了新机遇,在位企业能否成功把握成为生存关键。采用单案例研究方法,以软件企业为案例研究对象,探索在位企业如何通过商业运营实现新技术市场开拓。研究发现:(1)商业模式与组织身份共演过程中,涌现了惯性思路-身份转移、整合思路-身份延伸、修补思路-身份增补3种演化形式;(2)战略导向变化是商业模式与组织身份演化的动因,出现了由内向外、混合导向和由外向内3种变化;(3)演化中组织身份匹配于商业模式,表现为嫁接匹配、重塑匹配和扩充匹配3种机制。扩展了在位企业应对技术变化的研究视角,丰富了组织身份的动态变化研究,深化了商业模式与技术发展间关系的研究,可为在位企业商业实践提供借鉴。     

Innovation and the demand for food and drug labelling regulation in an evolutionary model of industry dynamics

Product innovation is examined in the context of an evolutionary model of industry and market behaviour in which a new product with a cost advantage and an unobservable, adverse characteristic competes with an existing product. Absent regulatory responses that ensure credible labelling, markets converge to steady state equilibria in which only the new product is traded. With credible labelling, the markets for the commodities become segmented. Welfare effects for consumers depend on the distribution of labelling ‘property rights’ between new and old product firms, market access, the cost advantage of the new product, and the magnitude of labelling costs     

Business planning based on technological capabilities: Patent analysis for technology-driven roadmapping

This research responds to the needs of technology-driven business by focusing on how firms can find new business opportunities based on their technological capabilities. It proposes a technology-driven roadmapping processes that starts from capability analysis for technology planning and ends with business opportunity analysis for market planning. We suggest the use of patent data as a proxy measure of technological capability for this purpose and develop four analysis modules — Monitoring, Collaboration, Diversification, and Benchmarking — to support decision-making during the process. Various analysis techniques such as text-mining, network analysis, citation analysis and index analysis are applied to discover meaningful implications from the patent data, which are summarized in four maps — Actor-similarity map, Actor-relations map, Technology-industry map, and Technology-affinity map. For the purpose of illustration, RFID-related patents are collected and the 18 firms with the most patents used, focusing especially on the third biggest. We believe using roadmapping and patent analysis together can play complementary roles for each other. Putting roadmapping techniques together with patent analysis can increase the objectivity and reliability of technology roadmap, while using patent analysis restricted to technological information together with roadmapping techniques can ensure that a more valuable breadth of strategic information is extracted from patents.     

Translating European regulatory approval into healthcare uptake for biosimilars: the second translational gap

ABSTRACT

With 15 biosimilar molecules in 9 different molecular classes and currently marketed under 23 distinct brands, the European pathway for regulatory approval of biosimilars has been demonstrably tried and tested. The gap that now remains is the translation from regulatory assessment and approval to incorporation of biosimilars within our healthcare systems in Europe. Despite many efforts by regulators to reach out to clinicians, there remains a translational gap for biosimilars which need to be incorporated in healthcare pathways and understood by clinicians and patients. Only by bridging this gap will biosimilars fully play their role in healthcare for Europe.