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Hidden benefits of a collaborative R&D alliance in the pharmaceutical industry: The case of Schering AG and Novo Nordisk A/S
Ekkehard Brockstedt
Senior Manager, R&D Project Management, SANKYO PHARMA GmbH, Munich, Germany
Chris Carr
Chair of Corporate Strategy, University of Edinburgh Management School, Edinburgh, United Kingdom
Abstract
In addition to the anticipated advantages of a collaborative R&D alliance, we argue that a number of valuable hidden benefits can arise from the process of a partnership itself. Hidden benefits can come in the form of innovations derived from preparing and organising the collaborative R&D alliance, the potential for improvement exposed in applying existing expertise to a new situation, the dynamic network generated by the collaborative R&D alliance itself, and the stimulating challenge of competition to parts of the organisation that are normally shielded from it. This case study focuses on the exploitation of the above hidden benefits within a well-planned collaborative R&D alliance between two pharmaceutical companies, Schering AG and Novo Nordisk A/S.
Concluding Remarks
Pharmaceutical companies used to be vertically integrated from research to marketing. This is less and less true for a variety of reasons, in particular, the high cost and risk of discovering and developing new products and the fast pace of change in the biological and chemistry-based sciences. As a result, other organisational forms have been tried. The most prevalent and current model, the strategy of virtual integration, is one where pharmaceutical companies enter into a series of collaborative R&D alliances with other discovery and development organisations.
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The anticipated as well as hidden benefits that arise from a well-planned collaborative R&D alliance can make a real contribution to maintaining a healthy competitive R&D organisation in the pharmaceutical industry. An example for that are the hidden benefits that arose for Schering AG in the collaborative R&D alliance with Novo Nordisk A/S. But managing a large portfolio of collaborations will become a major challenge, and for successful firms, it will be a core competence and a source of competitive advantage. Consequently, the experience gained in managing R&D collaborations can be an invaluable asset. There may be a tendency to underestimate its value, or to blank out collaborations which have been regarded as failures. Perhaps pharmaceutical organisations should, therefore, direct effort into developing structures and processes for accumulating, analysing and disseminating the lessons from past endeavours.
Keywords
R&D management, pharmaceutical companies, collaborative R&D alliance, virtual integration strategy, cross cultural innovation; organisational innovation, dynamic network
References
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