IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v13y2021i7p3599-d523033.html
   My bibliography  Save this article

Drug Discovery Firms and Business Alliances for Sustainable Innovation

Author

Listed:
  • Yoshimi Harada

    (Department of Innovation Science, School of Environment and Society, Tokyo Institute of Technology, Tokyo 108-0023, Japan)

  • Huayi Wang

    (Department of Innovation Science, School of Environment and Society, Tokyo Institute of Technology, Tokyo 108-0023, Japan
    Graduate School of Pharmaceutical Sciences, The University of Tokyo, Tokyo 113-8654, Japan)

  • Kota Kodama

    (Graduate School of Technology Management, Ritsumeikan University, Kyoto 603-8577, Japan)

  • Shintaro Sengoku

    (Department of Innovation Science, School of Environment and Society, Tokyo Institute of Technology, Tokyo 108-0023, Japan)

Abstract

Biotech startup firms developing pharmaceutical seeds from scientific and technological innovation are burdened by significant Research & Development (R&D) expenses, long-term R&D operations, and low probability of R&D success. To address these challenges while sustainably creating innovations and new drugs, business alliances with existing pharmaceutical companies are one of the most important issues on the management agenda. The present study explores the necessity and significance of business alliances with pharmaceutical companies for the development of drug-discovery by Japanese biotech startup firms under high uncertainty. This study investigates the types of alliances to understand the origins of sustainability of these creative activities. First, we investigate and analyze the details of the partnership and its impact on the products under development based on the publicly available information of 16 drug discovery biotech startup firms in Japan that had become public since 2010. As a result, all firms continued their operations with the funds obtained from the business alliances with pharmaceutical firms at the time of their initial public offering (IPO). In addition, 56% of these firms’ alliance projects ( n = 73) were seeded-out, and 32% seeded-in, indicating that they had adopted flexible alliance strategies not limited to seed-out ones. For sustainable going concern of the biotech startup business, it is valuable to consider multiple strategic options: “in-licensing and value up”, “best-in-class”, “platform leadership” and “first-in-class” depending on the characteristics of seeds and environmental restrictions.

Suggested Citation

  • Yoshimi Harada & Huayi Wang & Kota Kodama & Shintaro Sengoku, 2021. "Drug Discovery Firms and Business Alliances for Sustainable Innovation," Sustainability, MDPI, vol. 13(7), pages 1-20, March.
    • Handle: RePEc:gam:jsusta:v:13:y:2021:i:7:p:3599-:d:523033
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/13/7/3599/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/13/7/3599/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Rodolphe Durand & Olga Bruyaka & Vincent Mangematin, 2008. "Do science and money go together? The case of the French biotech industry," Strategic Management Journal, Wiley Blackwell, vol. 29(12), pages 1281-1299, December.
    2. Jan Faber & Carolina Castaldi & Roel W. M. Muskens, 2016. "Venture capitalist-induced relational fit and new venture performance: a Dutch biotech comparative case analysis," Venture Capital, Taylor & Francis Journals, vol. 18(3), pages 237-256, July.
    3. Thomas Hellmann & Manju Puri, 2002. "Venture Capital and the Professionalization of Start‐Up Firms: Empirical Evidence," Journal of Finance, American Finance Association, vol. 57(1), pages 169-197, February.
    4. Julia Porter Liebeskind & Amalya Lumerman Oliver & Lynne Zucker & Marilynn Brewer, 1996. "Social networks, Learning, and Flexibility: Sourcing Scientific Knowledge in New Biotechnology Firms," Organization Science, INFORMS, vol. 7(4), pages 428-443, August.
    5. Higgins, Matthew J., 2007. "The allocation of control rights in pharmaceutical alliances," Journal of Corporate Finance, Elsevier, vol. 13(1), pages 58-75, March.
    6. Sean Nicholson, 2005. "Biotech-Pharmaceutical Alliances as a Signal of Asset and Firm Quality," The Journal of Business, University of Chicago Press, vol. 78(4), pages 1433-1464, July.
    7. Rodolphe Durand & Olga Bruyaka & Vincent Mangematin, 2008. "Do Science and Money Go Together? The Case of the French Biotech Industry," Grenoble Ecole de Management (Post-Print) hal-00422650, HAL.
    8. Rodolphe Durand & Olga Bruyaka & Vincent Mangematin, 2008. "Do Science and Money Go Together? The Case of the French Biotech Industry," Post-Print hal-00422650, HAL.
    9. Lazonick, William & Tulum, Öner, 2011. "US biopharmaceutical finance and the sustainability of the biotech business model," Research Policy, Elsevier, vol. 40(9), pages 1170-1187.
    10. Yamakawa, Yasuhiro & Yang, Haibin & Lin, Zhiang (John), 2011. "Exploration versus exploitation in alliance portfolio: Performance implications of organizational, strategic, and environmental fit," Research Policy, Elsevier, vol. 40(2), pages 287-296, March.
    11. Roijakkers, Nadine & Hagedoorn, John & van Kranenburg, Hans, 2005. "Dual market structures and the likelihood of repeated ties - evidence from pharmaceutical biotechnology," Research Policy, Elsevier, vol. 34(2), pages 235-245, March.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Kalle Pajunen & Joonas Järvinen, 2018. "To survive or succeed? An analysis of biotechnology firms," Small Business Economics, Springer, vol. 51(3), pages 757-771, October.
    2. Fábio de Oliveira Paula & Jorge Ferreira da Silva, 2018. "The impact of alliances and internal R&D on the firm’s innovation and financial performance," Brazilian Business Review, Fucape Business School, vol. 15(6), pages 533-550, November.
    3. Mulligan, Kevin & Lenihan, Helena & Doran, Justin & Roper, Stephen, 2022. "Harnessing the science base: Results from a national programme using publicly-funded research centres to reshape firms’ R&D," Research Policy, Elsevier, vol. 51(4).
    4. Valérie Sabatier & Vincent Mangematin & Tristan Rouselle, 2010. "From Business model to Business model portfolio in the european biopharmaceutical industry," Post-Print hal-00430782, HAL.
    5. Jason Li-Ying & Yuandi Wang & Lutao Ning, 2016. "How do dynamic capabilities transform external technologies into firms’ renewed technological resources? – A mediation model," Asia Pacific Journal of Management, Springer, vol. 33(4), pages 1009-1036, December.
    6. Kwangsoo Shin & Minkyung Choy & Chul Lee & Gunno Park, 2019. "Government R&D Subsidy and Additionality of Biotechnology Firms: The Case of the South Korean Biotechnology Industry," Sustainability, MDPI, vol. 11(6), pages 1-22, March.
    7. Rozenn Perrigot, & Isabelle Piot-Lepetit & Gérard Cliquet, 2012. "Plural Form and Franchise Chains Efficency: A Dea Meta-Frontier Approach applied to French Chains," Economics Working Paper Archive (University of Rennes 1 & University of Caen) 201210, Center for Research in Economics and Management (CREM), University of Rennes 1, University of Caen and CNRS.
    8. Andrea Setti, 2020. "Linking science-based firms with performance factors: An integrative systematic review of literature," International Journal of Research in Business and Social Science (2147-4478), Center for the Strategic Studies in Business and Finance, vol. 9(2), pages 09-42, March.
    9. Tan, Jianhua & Wang, Xiongyuan & Zhang, Peng, 2022. "Logistics service standardization and corporate innovation: Evidence from a natural experiment," International Review of Economics & Finance, Elsevier, vol. 77(C), pages 549-565.
    10. Sheng, Shibin & Zhou, Kevin Zheng & Lessassy, Leopold, 2013. "NPD speed vs. innovativeness: The contingent impact of institutional and market environments," Journal of Business Research, Elsevier, vol. 66(11), pages 2355-2362.
    11. Thakur-Wernz, Pooja & Bruyaka, Olga & Contractor, Farok, 2022. "Sourcing portfolio diversity in new product development: Antecedents and performance implications," Journal of Business Research, Elsevier, vol. 150(C), pages 179-193.
    12. Coluccia, Daniela & Dabić, Marina & Del Giudice, Manlio & Fontana, Stefano & Solimene, Silvia, 2020. "R&D innovation indicator and its effects on the market. An empirical assessment from a financial perspective," Journal of Business Research, Elsevier, vol. 119(C), pages 259-271.
    13. Raphael Greiner & Siah Ang, 2012. "Biotechnology collaborations: does business model matter?," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 16(3), pages 377-392, August.
    14. Isabelle Piot-Lepetit & Rozenn Perrigot & Gérard Cliquet, 2014. "Organizational form and efficiency of franchise chains," Post-Print halshs-01023719, HAL.
    15. Elodie Gardet, 2009. "Modes de coordination instaurés par le pivot d'un réseau d'innovation : le cas d'un porteur de projet TPE," Post-Print hal-01291988, HAL.
    16. Swan, Jacky & Goussevskaia, Anna & Newell, Sue & Robertson, Maxine & Bresnen, Mike & Obembe, Ademola, 2007. "Modes of organizing biomedical innovation in the UK and US and the role of integrative and relational capabilities," Research Policy, Elsevier, vol. 36(4), pages 529-547, May.
    17. Marie-Laure Allain & Emeric Henry & Margaret Kyle, 2011. "Inefficiencies in technology transfer: theory and empirics," Working Papers hal-03473787, HAL.
    18. Umit Ozmel & Deniz Yavuz & Jeffrey J. Reuer & Todd Zenger, 2017. "Network Prominence, Bargaining Power, and the Allocation of Value Capturing Rights in High-Tech Alliance Contracts," Organization Science, INFORMS, vol. 28(5), pages 947-964, October.
    19. repec:hal:spmain:info:hdl:2441/eu4vqp9ompqllr09iatrn4log is not listed on IDEAS
    20. Giovanni Dosi & Valérie Revest & Alessandro Sapio, 2016. "Financial regimes, financialization patterns and industrial performances : preliminary remarks," Post-Print halshs-01418040, HAL.
    21. Filson, Darren & Oweis, Ahmed, 2010. "The impacts of the rise of Paragraph IV challenges on startup alliance formation and firm value in the pharmaceutical industry," Journal of Health Economics, Elsevier, vol. 29(4), pages 575-584, July.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jsusta:v:13:y:2021:i:7:p:3599-:d:523033. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.