Strategic Alliances in Global Biotech Pharma Industries

Abstract

This paper presents an application of network economics to the formation of alliances in the biotechnology- pharmaceutical industry. The framework analysis provides insights under which firms create hybrid governance forms, in- tegrate strategy and economics into a more holistic perspective on network strategy. Firm network types link network economies, competencies and market structure, creating integration between participants and change as additional dimen- sions. ‘Change’ introduces a dynamic, evolutionary aspect. The resulting constructs involve the network dimension as a mechanism design for investigating the evolution and life cycles of firm networks. An analysis of alliances within the pharmaceutical and biotechnology industries develops the framweork, including a his- torical tracing, and an empirical examination of the relationship between collaboration rate (CR) and market performance of major globally operating pharmaceutical firms. Case examples, supported quantitatively and qualitatively, provide evi- dence for the efficacy and implications of the network dimension.