Chapter 2, by Phil Cooke, provides an overview of the spatial distribution of the biotechnology industry in the world. The chapter describes the factors that motivated this decision and the early efforts of the company.
Introduction
Constructed regional advantage arises largely from the impact of public goods on the region.2 Thus, in the life sciences, the university and the medical school are a key factor, not only because of their role in creating talent, but also because of the innovative research and entrepreneurial enterprises they sustain. A global bioscience market analysis is carried out, followed by an in-depth analysis of the UK sector, a leading European and second biotech economy in the world.
The Global Health Care Market in Relation to Biotechnology
The European leader in the share of public biotechnology is the UK with 40% of the European total. The point was made earlier that the venture capital-driven boom of the 1990s squeezed a significantly larger number of NCEs into the market in the late 1990s than until now.
Global Bioregions
The evolutionary stimulus is provided by attracting a variety of imitative and innovative talent to the region, a Schumpeterian 'swarm' that realizes increasing returns to related variety where innovation can move rapidly through various parts of the innovation 'platform'. The high-impact scientists and the institutions they inhabit as transmitters of knowledge between the world's key groups are remarkably hierarchically networked, with the key USA dwarfing most of the rest.
The World Leaders in Brief: Top Bioclusters in the USA
More than 19,000 are employed in research in the region, and today two of the top ten recipients of NIH R&D grants in the USA are University of California (San Francisco) and Stanford. Funding for basic research is higher in the Cambridge-Boston bioregion – the heartland of the Massachusetts cluster – than in San Francisco and San Diego – the equivalent biotech hubs in California.
Comparison of UK and German Clusters
Two of the firms, MorphoSys and Micromet, were collaborating on the development of an antibody-based treatment for micrometastatic cancer. Another firm, Mondogen, was spun off from the Virus Research department at the Martinsried Max Planck Institute for Biochemistry.
Bioregions and Their Key Characteristics Elsewhere
Economic Geography of Clusters Spawned by
In the three cases that are under the spotlight here - Sweden/Denmark, Switzerland and Singapore - the influence of big pharmaceutical drugs, as mentioned, is pronounced. Lonza Biologics is also Swiss and one of the largest biosynthesis firms in the world.
The Research and DBF-led Clusters in Israel and Canada
It is important to maintain a global presence in the pharmaceutical industry in geographical proximity to key bioscience clusters. Helping to create stronger linkages beyond the currently reasonably healthy publishing collaboration between bioregions and US leaders will also accelerate non-company-led knowledge transfer.
Introduction
Because they play a crucial role in the entrepreneurial process, these relationships shape the geographic distribution of industries. The rest of this chapter presents this idea and the evidence that supports it in more detail.
Social Networks and Geographic Proximity
Again, both geographic and social proximity affect the costs of interaction and thus the odds that relationships emerge from chance encounters and persist over time. Introductions through friends and colleagues, for example, simply lead to more connections with similar others.
Social Networks and Entrepreneurship
- Opportunity Perception
- Intellectual Capital
- Human Capital
- Financial Capital
In biotechnology, as in other contexts, the most valuable connections are with those working in the industry. Workers in the biotechnology industry typically come from the same two sources as the entrepreneurs themselves.
Implications and Evidence
That story describes, for example, the emergence of the biotechnology cluster in San Diego (Mitton 1990). However, if geographic concentration is negatively correlated with firm performance, few (if any) explanations—other than the one advanced here—can account for the geographic concentration of the industry.
Policy Implications
Although these processes generally result in a reproduction of the industry's existing geography, two factors may moderate these effects over time and allow the industry to diffuse gradually. On the other hand, as companies within the industry grow, they may expand into new regions.
Summary and Outlook
Sorenson O, Audia PG (2000) The social structure of entrepreneurial activity: geographic concentration of shoe production in the United States, 1940–1989. Zucker LG, Darby MR (1996) Star scientists and institutional transformation: patterns of invention and innovation in the formation of the biotechnology industry.
Introduction
Understanding the factors that determine the formation and stability of IN is only part of the problem. Here we will try to predict the expected future development of industrial organization in biotechnology.
The Nature of Innovation Networks
- The Entry of New Firms
- Biotechnology
- The Changing Role of Universities
- Theories of Industrial Organization
- Innovation Networks
INs evolve from the creation of new resources in the early stages to the exploitation of existing ones in the later stages. As will be seen, such a property is very important in the dynamics of networks.
Recent Developments in Network Dynamics
The centrality of the different actors (DBFs, LDFs, PRIs) involved in the first generation of biotechnology alliances. The centrality of the different actors (DBFs, LDFs, PRIs) involved in the second generation of biotechnology alliances.
Summary and Conclusions
The less cyclical influence of a high and increasing rate of new knowledge creation can be superimposed on that of discontinuity. Gemser G, Leenders M, Wijnberg N (1996) The dynamics of interfirm networks over the industry life cycle: the role of appropriation.
Introduction
In this chapter, we describe a number of factors that are essential components of strategic thinking in early-stage biotech companies. Later in this chapter, we will refer to this group of early-stage firms as the fifth stage.
Sector Development Review
We will present these by describing the relevant theories and some of the existing empirical evidence. In the section following this introduction, we will give the reader a brief overview of developments in the global biotechnology sector.
Innovation in Biotechnology
As mentioned in the introduction, we are focusing our discussion on strategic thinking in biotechnology for small start-ups that are still desperately chasing a core technology. We have also tried to focus on firms not only located in biotech "hotspots" (San Diego, Boston or Seattle), but to describe larger phenomena as many areas are trying to become biotech hubs from scratch, such as it's Scripps. Institute in Florida (Clouser 2007) or BioCity in Singapore.
Theoretical Bases for Entrepreneurial Biotechnology
The dominant view in early stage biotech entrepreneurship is Schumpeter's, as the new biotech entrepreneur is usually totally technology and product oriented. Kirznerian market orientation is as important to biotech entrepreneurship as is the frame-breaking view of Schumpeter.
Strategic Management, Entrepreneurship, and Biotechnology
The first and last seem to have had a pronounced presence in entrepreneurship (Grégoire et al. 2006). Later, an extension of the resource-based view, the dynamic flow of strategic management capabilities (Teece et al. 1997;.
Strategy Components in Early-Stage Biotechnology Firms
- Proactiveness
- Fit
- Reactiveness
- Traditions and History
This again has the potential to promote the company's alertness to relevant market information available in the business environment. A company's market orientation should have a positive effect on the willingness of external investors to invest in the company.
Discussion and Conclusions
Colombo MG, Grilli L (2005) Founders' human capital and the growth of new technology-based firms: A competency-based view. Deeds DL, Hill CW (1996) Strategic alliances and the stage of new product development: an empirical study of entrepreneurial biotechnology firms.
Introduction
Many biotech firms lack the know-how, effectively bypassing this value chain themselves. Biotech firms also enter into alliances at later stages of the value chain, aimed at leveraging existing technology, by partnering with organizations that are closer to the market, such as pharmaceutical companies, clinical research organizations or large-scale manufacturers.
Why and with Whom Do Biotechnology Firms Form Alliances?
Access to Knowledge and Other Complementary Resources
Through partnerships, the companies thus strive to gain access to the broad pool of knowledge from the biotechnology industrial and scientific community. However, the pursuit of knowledge, particularly regarding the early stages of the drug development process, requires a biotech firm to seek a central position in the broader network structure of the market to better access industry-wide knowledge flows and pools of innovations (Powell et al. 1996).
Pursuit of Legitimacy
The choice of partners is thus atomistic and largely takes place within the narrow context of a potential relationship. Strategic alliances with reputable partners are one of the most promising routes to legitimacy for biotechnology firms (Baum and Silverman 2004; Stuart et al. 1999).
Choosing Partners
The ability to attract a partner is critical, as biotech firms face intense competition for the attention of prominent and valuable potential allies. Motives include those of a more or less calculative nature and address both the needs of biotech firms and their ability to attract desirable partners.
Governance of Alliances
More specifically, a one standard deviation increase in equity leads to an 11% decrease in the predicted number of control rights allocated to the financing company. Building on early research that focused on the choice of initial governance form, a promising stream of work has attempted to unravel the factors that drive changes in alliance governance form as the partnership evolves.
Consequences of Alliances
Consequences of Accessing Knowledge and Other
For example, a firm's position in the larger social structure shapes the quality of its cues and referrals regarding alliance and technological opportunities, as well as its access to the industry-wide pool of knowledge (Gulati 2007). Alliances within a geographic cluster due to a firm's proximity to the sources of knowledge contribute to the firm's ability to transfer complex and tacit knowledge and access information spillovers.
Consequences of Enhancing Legitimacy
Taking Off the Rose-Colored Glasses: Alliances as Relational
Crucially, some alliance partners may have their competitive or value acquisition motives dominate their cooperative or value creation motives (Amburgey et al. 1996). It is therefore not surprising that a biotechnology company's participation in horizontal alliances, which often involve partnerships with competing companies, has been associated with declining revenues and reduced levels of innovation (Baum et al. 2000; Baum and Silverman 2004).
Future Research
Eisenhardt KM, Schoonhoven CB (1996) Resource-based view of strategic alliance formation: Strategic and social effects in entrepreneurial firms. Gimeno J (2004) Competition within and between networks: The conditional effect of competitive embeddedness on alliance formation.
Introduction
Development of the Biotechnology Industry and the Need for M&A
The Development of the Biotechnology Industry from a Scientific
In 1983, the first experiments with genetically modified microorganisms were allowed in the United States, and in 1985 the first genetically produced hepatitis B virus antigens were introduced. The third phase, from 1984 to 1990, is considered the first successful phase of biotechnology because there were strong indications that real.
The Development of the Biotechnology Industry from an
Third, the growing awareness of the innovation deficit among pharmaceutical companies is causing them to look for alternatives: biotechnology. Interestingly, mergers and acquisitions are referred to as types of “partnership agreements” that reflect the specific context of the biotechnology industry and its social network structure.
The Development of the Biotechnology Industry from a Financial
The development of the biotechnology industry has been described from three different perspectives: (1) scientific, (2) organizational and (3) financial. In principle, biotech companies can choose between two approaches to solving this problem: a biotech-to-biotech deal or a pharma-to-biotech solution.
Layers of M&A Activities
M&A Activities Among Biotechnology Companies
Some biotech companies acquire others to position themselves as integrated product developers and thus become more integrated drug discovery companies or service providers. These key questions also correspond to the main strengths of Patzelt et al. 2007) find in their empirical study regarding the takeover of German biotechnology companies.
M&A Activities Between Pharmaceutical and Biotechnology
Pharmaceutical companies are faced with the need to acquire knowledge in order to remain competitive in the future by having enough promising lead compounds. The reason for this is that pharmaceutical companies pursue different motives, which in turn require different integration approaches depending on the knowledge and competencies of the acquired biotechnology companies.
Summary and Future Research
How can a pharmaceutical company maintain the culture of innovation and research in the acquired biotechnology company in the long term. Saviotti P, de Looze M-A, Maupertuis MA (2005) Knowledge dynamics, firm strategy, mergers and acquisitions in the biotechnology-based sectors.
Introduction
Indeed, Kirin's history in biopharmaceuticals illustrates the role individual entrepreneurship plays in a large company. One reason for this neglect may be the difficulty of locating entrepreneurship in the complexity of large firms.
The Locus of Entrepreneurship
Another drawback of the neo-Schumpeterian treatment reflects a deficiency in Schumpeter's (1942) later work, namely that entrepreneurship disappears from view. Specifically, there is a risk in the traditional methodological approach to economics that historical sources and accounts of those who carry out entrepreneurship may be neglected.
Background
Management engages in "organizational routines" that may change as a result of the company's "search" (innovation) activities. Although this can be defended in terms of a philosophy of science of the nominalist variety (eg Friedman 1953), it is not without potential weaknesses.
Synergy
- Opportunity Recognition
- Early Efforts with Erythropoietin
- Importance of Tacit Knowledge
- Scientific Gatekeepers and Academic Collaboration
Jun Kojima, of Kirin's pharmaceutical division, noted that the company sought to diversify in the 1980s. Koichiro Aramaki, of Kirin's pharmaceutical division, recalled: "[At that time, the major Japanese pharmaceutical companies] had not yet attempted research in the new field.
Serendipity
- Origins of the Alliance with Amgen
- Structure of the Joint Venture
- Kirin’s Contributions and Manufacturing Scale-Up
- Outcome of the Joint Venture
- Key Success Factors
The Kirin–Amgen joint venture was governed by a board of directors consisting of three representatives from each company. Originally, Kirin–Amgen owned all rights to EPO, and a 5% royalty on all sales of EPO by partners and their licensees went to the joint venture.
Strategy
Targeting Niche Therapeutic Fields
Furthermore, Kirin-Amgen's experience in guiding EPO and G-CSF through development and clinical trials to market launch was seen as an indicator of the prospects for successful commercialization of TPO. These licensing rights brought Kirin–Amgen useful technology, strengthened its patent position, and complemented the development of MGDF, the new platelet growth factor that Amgen and Kirin were code-developing.
Cell Therapy and Stem Cell Research
Not only was this the third Kirin-Amgen development project that was quickly completed, but it was also seen as a fitting fit, as the partnership could weaponize two patents in any legal wrangling that might have arisen. Kirin researchers developed significant knowledge of blood cell biology and identified two types of cells on which to focus their research activities: the CD34 stem cell and the dendritic cell for cancer immunotherapy.
Monoclonal Antibodies and the Transgenic Mouse
They couldn't put the entire antibody gene into the mouse because of the limited size for the transgenesis. According to Kirin's Kazuma Tomizuka, Medarex's patent application described the original concept of the human antibody from a mouse, but Kirin's patent covered a mouse containing the entire immunoglobulin locus.
Conclusions
Kirzner IM (1982a) Uncertainty, discovery and human action: A study of the entrepreneurial profile in the Misesian system. Minkes AL, Foxall GR (1980) Entrepreneurship, strategy and organization: Individual and organization in the behavior of the firm.
Introduction
Much of the more modern thinking on entrepreneurship has focused on the cognitive process by which individuals make the decision to start a new business. Hebert and Link (1989) have identified three distinct intellectual traditions in the development of the entrepreneurship literature.
Scientist Biotech Entrepreneurship
In virtually every study, the nature of the entrepreneurial opportunity involves the commercialization of science. The applicability question facing academic scientists can be considered in the context of the model of scientific human capital over the life cycle.
Conclusions
While all modes of commercialization are important, scientific entrepreneurship in biotechnology emerges as an important and dominant mode of commercialization of university research. Second, the mode of commercialization is clearly not independent of the commercialization path for biotech scientists.
Introduction
The Context of the Biotechnology Industry
Entrepreneurial Universities
Scientific Entrepreneurship
Changes in Academic Science
University Spin-Offs and University-Based Spin-Offs
University-Based Spin-Offs as a New Organizational Form
Levels of Analysis of USOs and USBOs
A Life Cycle Approach to USOs
Integration, Complexities and New Research Directions
Introduction
Biotechnology Industry: Meaning and Scope
Genetic Engineering: Basic Features
Genetic Engineering: Continuity or Discontinuity?
Patents: An Overview
Basic Issues
Evolution of Patents in Biotechnology
Patenting Biotechnology: Implications
Patenting Life Forms and ‘Ordre Public’: Basic Issues
Implications of Patent Length
Implications of Patent Scope
Benefit Sharing: ‘Bio-Diversity’ vis-à-vis ‘Indigenous Science’
Conclusion
Introduction
Legal Framework and Public Support: Rationales and Economic
The Impact of Public R&D Funding: Empirical Findings
Evidence Concerning the Impact of Legal Framework Changes
Commercialization of Science and Entrepreneurial Choice
The unanimity of entrepreneurial opportunities reflects the unique activity of scientists engaged in research. The scientist's life cycle model implies that, ceteris paribus, personal characteristics of the scientist, such as age, should play a role in the decision to become an entrepreneur.
Future Research and Concluding Remarks
Legal Framework Changes in Germany
