Innovation Capabilities in Bio-Pharmaceutical R&D

ABSTRACTInnovation is key to success for any organization and distinguishes a firm from its competitors. Definitions of innovation vary by industries, as industrial features require distinctive innovation capabilities. This paper describes bio- pharmaceutical industry's idiosyncratic issues, innovation-related chalenges, success factors, an a close relationship between corporate strategy and innovation. Currently, bio- pharmaceutical industry needs to be better equipped to handle current market factors including influence of globalization and new drug laws. To reflect industrial chalenges, this paper contextualizes biopharmaceutical innovation and its success factors, and frames distinctive innovation capabilities by literature and theories. This paper contends that innovation capability consists of managerial capability and its strategic behaviorKeywords: Strategic management, bio-pharmaceutical industry, intellectual property, technology, knowledge, networking, collaboration, capability, innovation, management capabilityINTRODUCTIONGenerally, innovation can be defined simply as the successful exploitation of new (DTI, 1994). Baumol (2002) said, innovation is the recognition of opportunities for profitable change and pursuit of those opportunities all way through to their adoption in practice. Drucker (1994) said that the best, perhaps only, way a business can hope to prosper, if not survive, is to innovate. This conceptual paper argues that definition of innovation differs across industries. Innovation is contextual concept; since innovation is development and implementation of new ideas by people who overtime engage in transactions with others in an institutional context (Van de Ven, 1986). Hence, it is important for every industry to understand and develop their unique definition in order to generate optimum results. Each industry's own definitions of productivity lead to different and possibly unique ways of productive exploitation and hence different ways of innovation. With a focus specifically on pharmaceutical industry, this paper illustrates distinctive managerial capability and its strategic behavior lead to distinctive innovation.This paper contextualizes innovation in bio- pharmaceutical RD* The growing demand for therapies among aging populations of OECD countries;* Unpredictable demands on industrial responsiveness due to outbreaks of SARS, avian flu, and so on;* The industrial restructuring that has accompanied outsourcing to small drug discovery firms;* The necessity to market not just to end-users (which is in any case illegal in many jurisdictions), but to physicians, insurers, and governments;* The blockbuster drug phenomenon, in which a tiny fraction of a firm's drug portfolio account for bulk of sales; and* Many drugs now falling off patent;Parts of these are current industrial issues, which have been criticized from economic perspective, e.g., expenditure and lengthy development time (DiMasi et al., 2001; DiMasi, 2002; DiMasi et al., 2003). Together, given discontinuously changing turbulence level, these factors have led some writers to call for a new managerial model (Kim, 2012) or a new business models in pharmaceutical industry (Bode-Greuel et al. …