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Mid-Pharma: How big is it and where is it going?

Yoruk, DE   Mittra, J

January 2009


The transformation of large, global pharmaceutical companies - due to a number of challenges facing contemporary drug development such as low productivity, high attrition rates of compounds in phase 2 development, patent expirations on blockbuster drugs and increasingly stringent regulatory hurdles - is now well-known and much commented upon. Large companies are struggling to develop sufficient novel therapies and deliver them to market for sustainable long-term growth. While much has been written about the changing fortunes of the large, multinational drug developers, as well as the emerging small and medium biotechnology companies that are increasingly a rich source of knowledge and innovation, the growth of medium sized pharmaceutical companies has been under explored. The purpose of this paper is to examine a select group of medium-sized pharmaceutical firms; that is companies that are global players with significant internally driven R&D and broad product portfolios (excluding those exclusively in the generics market) but are not in the “first league” of global industry players. We will explore how these companies are situated within the broader competitive environment and how they are managing the opportunities and challenges arising from changes in the underlying science and technology (e.g., the shift from conventional chemical compounds to the life sciences and biologics).

Our analysis will be presented in three sections. The first section will describe the structure of the medium-sized pharmaceutical sector. We will develop definitional criteria and justify the sample of companies studied. We will also provide an overview of key statistics regarding the development of the companies since 2000. The second section will focus on the innovation processes of the respective companies; particularly their organisational structure, key R&D strategies and how they have sought to balance in-house R&D with externally sourced knowledge and expertise (through equity relationships, licensing, and R&D collaborations). The third section will examine the innovation trajectories and strategies underlying the innovation processes explored in section two. Here, we will describe how the companies have exploited new technologies, selected therapeutic foci and shaped their pipeline. In the concluding section, we will summarise the key findings and discuss the broader implications of the study for pharmaceutical innovation and strategic innovation management.

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