Externalization of Corporate Science in Big Pharma

Externalization of corporate R&D became the new important trend characteristic of the innovation development of Big Pharma firms in the last decade. Having accumulated about a half of the R&D investment of the global pharmaceutical industry, these giants had relied for a long time largely on their own research capabilities. However, in the end of the XX century the situation began to change. The decline of their traditional blockbuster business model, which was increasingly losing the ability to generate sufficient revenues to finance the fast-growing drug discovery and development costs of Big Pharma firms, led to the so-called productivity crisis of pharmaceutical R&D and became the major driver of externalization of their corporate science reflecting difficult transition to open innovation. The urgent need to adopt specialty pharma business model forced Big Pharma firms to master the completely new competencies and technologies, which was possible only through intensive R&D cooperation with external partners, in particular with biotech companies. Developing this cooperation at scale, the pharmaceutical giants quickly learned that the partnership mechanisms should be very flexible, allowing external participants to maintain considerable autonomy and to preserve unique creative culture and knowledge management organization. As a result, similar indirect mechanisms of R&D interaction were introduced into in the relationships with other innovative partners, thus contributing to the emergence of R&D ecosystems around each of the Big Pharma firms representing the networks of long-term partnerships with various R&D players coordinated mainly through informal instruments. Digital transformation of the pharmaceutical industry, and especially the active use of artificial intelligence (AI) technologies in pharma research, became the new important driver of corporate science externalization. The lack of digital competencies (particularly in AI area) has already pushed Big Pharma companies into various R&D partnerships with specialized tech firms. Simultaneously, the rise of digital platforms as the new format of research cooperation enhanced the toolbox of existing R&D ecosystems with crowdsourcing and virtual drug design platforms.