Seminar on technology Strategy
Session 4. Inter-organizational & Market Perspective
ODI – OM / Eun-ji, Lee
# This is the review/critique of the assigned paper. The review paper includes 3 factors; Summary of the paper, Main contribution, Critique.
# Gambardella, A.(1992). Competitive advantages form in-house scientific research – The US pharmaceutical-industry in the 1980. Research Policy, 21(5), 391-407
- Summary of the paper
This paper shows us whether or not pharmaceutical companies benefit in their business approach by taking advantage of knowledge which is available to everyone. The paper compares the business approach of six different pharmaceutical companies and the effectiveness of each based on the ratio between their use of existing ‘public’ knowledge and their ability to research new ideas based on this knowledge. The author, Gambardella uses case studies of these six companies in order to illustrate and analyze his argument.
Merck is a highly successful business. Merck’s business approach is structured around collaboration of peers. This means that the scientists and researchers within the company talk to each other when they have a new idea. An example is used to describe the effectiveness of this approach with Merck’s drug, Mevacor. To develop this product they drew on existing knowledge and researched it further to create their drug. They have also used the same approach to develop other products. This approach has resulted in success for Merck as a company. Although the knowledge that lead to the development of this drug was available to all others, Merck was the company which was able to take this further knowledge.
Eli Lilly is another research intensive company. They invest a lot of money not only in drugs themselves but the technology which will enable their scientist to perform more complex investigations.The example used here is Prozac, which shows the company’s ability to bring new products to the market through extensive research. This demonstrates that although some of the information for the development of this drug was available to everyone, Eli Lilly was better equipped to perform the research needed to develop the final product.
Based on the above, the company has competitive strength to develop new and innovative ideas.
Bristol-Myers / Squibb, two companies who have merged together in order to become stronger. Originally the two companies were separate. Bristol-Myers was spread across the U.S taking advantage of its geographic location to further its recruitment and contact with the academic industry. Despite their wide areas of research the company was unable to create any strong results. They have not come up with any new ideas nor do they have any in production. Squibb had some success on its own with the discovery of Capoten. This discovery was based on ‘public’ knowledge and research further to create the product. In similarity to Eli Lilly, the information available was best used by a company with the skills to understand it. This however was not enough as they only made this one discovery, with the application of competitive products, the company’s place in the market was unstable.
The main point from a business perspective here is the combination of the two companies. Squibb brought the ability to conduct effective research and Bristol-Myers brought the marketing expertise needed to sell their products. They are stronger together.
SmithKlineis an example of necessary improvement to a product based on a competing company. SmithKline was the only company on the market with a particular drug product. However another company, Glaxo, had developed a competitor product which was more effective. This forced SmithKline to reactively re-engineer their own drug to make it better. They were unsuccessful and experts speculate that this is largely due to the fact that they lack the ability to perform the necessary research. The main point is that they did not continue to try and make their products better. In addition their two main leaders left the company, James Black and William Duncan, who helped to inspire and create an intellectual environment within the company. After they left the company did not try to hire any new leaders and the research skills and leadership were not replaced.
Roreris a company with a very aggressive and risky strategy. Rorer bought another business, Revlon. This increased their outgoing costs by four times and as a result they needed a quick idea to make back the money which they were spending. Eventually they were bought by Rhone-Poulec with the aim of reinforcing the two companies so that research could continue.
- Main Contribution
I learned from this paper that it is important to use all information available as well as share information within the company to create successful products. Based on a theory where information is available to researchers, companies with better in house capabilities will be able to find more useful strands of information and use this to create good products. Companies who do more research into new and innovative ideas for products will be more successful than companies which attempt to copy or imitate products which already exist and do not have the research capability to turn the existing product into a better one.
- Critique
The author said that in-house researcher should have a capability to utilize all information available. However, I think it is hard to achieve it. It’s because we should consider the time and the cost.No one can be absolutely sure that investmentswillpayoff.So, I think the cooperativesystems,A University and Industry collaboration, can be a good alternative. It is an opportunity for students to take practical education through cooperating with the industry. Also, For company, It is an effective ways to get information to utilize their product development.From this view, An analysis of the factors affecting the interaction between University and Industry will be an interesting study.