Converging scientific fields and new technological

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Converging scientific fields and new technological paradigms as main drivers of the division of scientific labour in drug discovery process: the effects on strategic management of the R&D corporate change a

Mario Coccia a

Institute for Economic Research on Firm and Growth, CNR – National Research Council of Italy, Turin, Italy Published online: 17 Feb 2014.

To cite this article: Mario Coccia (2014) Converging scientific fields and new technological paradigms as main drivers of the division of scientific labour in drug discovery process: the effects on strategic management of the R&D corporate change, Technology Analysis & Strategic Management, 26:7, 733-749, DOI: 10.1080/09537325.2014.882501 To link to this article: http://dx.doi.org/10.1080/09537325.2014.882501

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Technology Analysis & Strategic Management, 2014


Vol. 26, No. 7, 733–749, http://dx.doi.org/10.1080/09537325.2014.882501

Converging scientific fields and new technological paradigms as main drivers of the division of scientific labour in drug discovery process: the effects on strategic management of the R&D corporate change Mario Coccia∗ Institute for Economic Research on Firm and Growth, CNR – National Research Council of Italy, Turin, Italy

The thesis of this study is that the convergence of genetics, genomics and proteomics spurs new technological paradigms in medicine, which are generating a R&D corporate change: division of scientific labour of the drug discovery process by strategic alliances among firms in order to reinforce the integrative capabilities in different biomedical research fields and collective and cumulative learning between in-house R&D and external sources of innovation. This study shows, by key a case study of pharmaceutical companies, as scientific and technological paradigms in medicine are main drivers of industrial and R&D corporate change to enhance and accelerate the discovery process of ground-breaking drugs for more and more personalised healthcare. Keywords: technological paradigm; division of labour; learning process; corporate change; strategic change; R&D function; molecular biology; targeted therapy; clinical research; personalised healthcare

1.

Introduction and the problem

High research and experimental development (R&D) investments in life sciences are generating scientific advances in converging genetics,1 genomics2 and proteomics3 and supporting path-breaking ‘technological paradigms’4 of new anticancer treatments (Coccia 2012c; 2012d; 2012f; 2014a).5 In particular, genetics is playing a key role in treating genetic disorders that generate several tumours; in fact, scientific advances in genetics, associated to proteomics, help to understand the disease biology in order to support effective anticancer drugs for modern clinical practice (Jain 2000, p. 319; Afshar 2003, 392; Coccia 2012a; Coccia 2013). Instead, the genomics is providing vital opportunities for new treatments in more than 100 multifactoral diseases, with 500–1000 disease-related genes and 3000–10,000 new drug targets (cf. Jain 2000, ∗ Email:

[email protected]

© 2014 Taylor & Francis


734 M. Coccia 318). As a matter of fact, the interaction between medicinal chemistry and genomics has created the pharmacogenomics6 that examines the way drugs act on cells as revealed by their gene expression patterns. Lindpaintner (1999) argues that these scientific breakthroughs are the basis for the development of personalised medicine. In addition, the gradual R&D process that drives these ground breaking targeted therapies is affected by the progress of ‘Learning in practice’, by ‘Advances in biomedical scientific understanding’ (Morlacchi and Nelson 2011, 512, passim) and by “‘learning via diffusion” … . The increased adoption of a technology paves the way for improvement in its characteristics’ (Sahal 1981, 114). These key processes are critical determinants of the technological change in targeted therapies for cancers and other serious diseases (Coccia 2012a,c; cf. also Gershon 1998; Hirsh 1997; Lenfant 2003). Hence, the convergence of genetics, genomics and proteomics, based on molecular biology, and associated technological innovations, are transforming the medicine at a rapid pace as well as the organisational and managerial behaviour of firms in drug industry. An interesting problem arises with respect to how technological innovation affects R&D function of pharmaceutical firms in turbulent markets. The purpose of this paper is to analyse the impact of new technological paradigms in medicine on R&D corporate change. I hypothesise that new patterns of scientific and technological trajectories in biomedical sciences are driving a vital R&D strategic change7 of the pharmaceutical industry in order to support and accelerate the drug discovery process. I confront this hypothesis by analyzing a case study of leading firms and by developing a framework, which endeavors to detect the strategic change of the R&D functions that is supporting path-breaking drugs (for building theories see: Sutton and Staw, 1995; Di Maggio, 1995; Weick, 1995; Whetten, 1989; Corley and Gioia, 2011). The philosophy of science of my research is based on the position that there can be no adequate scientific knowledge where causes are unknown. This study analyses the phenomena to be explained by a scientific realism in order to achieve ‘at least approximate truths’ (Thagard, 1988, p. 145; cf. Kukla, 1998). This approach can shed light on some likely linkages and effects of the patterns of technological innovation on industrial and R&D corporate change in order to support drug discovery process.

2. Theoretical background and related works Technological paradigms are generated and driven by scientific paradigms (Kuhn 1962) and scientific research programmes (Lakatos 1978). Generally speaking, there is an interval between scientific invention and innovations that in some cases can be more then 50 years (cf. Rosegger, 1980, 198ff; Coccia, 2010b,d). In particular, the scientific knowledge supporting technological paradigms has to transit in applied sciences in order to find solutions to ‘relevant problems’ (cf. also Dosi, 1982, 1988); when scientific breakthroughs are embodied in radical technological innovations, they can generate economic and social change. Sahal (1985, 70, original emphasis) argues that:

the origin of revolutionary innovations lies in certain metaevolutionary processes involving a combination of two or more symbiotic technologies whereby the structure of the integrated system is drastically simplified.

Converging scientific fields and new technological paradigms

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Instead, Nelson (2008, 489ff) claims that:


scientific understanding underlying a technology tends to be contained in the applications oriented sciences …. a strong body of scientific understanding enables technological progress to be rapid and sustained … . the research in the engineering disciplines and applications oriented sciences aims to develop understanding of what is going on in the operation of the relevant field of practice, so as to illuminate how to advance it.

Determinants of technological paradigms, according to Nelson (2008), are the economic and human resources, and to a lesser degree “‘effective demand”’ (Nelson 2008, 487; cf. Coccia, 2014b, 2014c, 2011, 2010c, 2009a,b). Nelson (2008) also argues that the evolutionary growth of technological paradigms is supported by a learning process based on the ability to identify, control and replicate practices, in other words: ‘the ability to tightly control, clearly specify, and accurately replicate practices so that knowledge can be successfully accumulated is vital for the growth of effective “know-how”’ (as quoted by von Tunzelmann et al. 2008, 479); moreover: ‘for progress to be made the practices involved must have a certain amount of “routines” about them’ (Nelson, 2008, 488, original emphasis; cf. also Nelson and Winter 1982, passim). However, the ‘relationships between the ability to advance practical know-how and the strength of scientific knowledge underlying that know-how are complex’ (Nelson 2008, 487). In general, the origin of a new technological paradigm is driven by some scientific and technological forces that ‘break-out’ current trajectories (Dolfsma and Leydesdorff 2009). Sahal (1985, 79, original emphasis) claims that: the process of technological evolution is characterized not only by specific innovation avenues that concern individual industries … , but generic innovation avenues as well, that cut across several industries … . it is apparent that the emergence of a new innovation avenue through fusion of two or more avenues or through fission of an existing avenue can give rise to sudden changes in the mode and tempo of technical progress. (cf. Coccia 2005a,b, 2010a, 2014c)

As far as medicine is concerned, the convergence of research fields in cell and molecular biology supports new technological paradigms that branch off technological trajectories of path-breaking drugs for cancer and other serious diseases. In particular, technological change in medicine is driven by scientific advances in genetics, genomics and proteomics,8 which have paved the pathway to some technological paradigms in biomedical sciences, such as targeted cancer therapies, which: ‘are drugs or other substances that block the growth and spread of cancer by interfering with specific molecules involved in tumour growth and progression’ (as defined by National Cancer Institute 2013; Coccia 2012a). These new technological paradigms, based on effective targeted therapies, are generating a revolution in clinical practice in terms of increasing survival of patients and their quality of life. In other words, these ground-breaking drugs have higher effectiveness and lower adverse reactions (Coccia 2012a). These new technological paradigms have generated a R&D strategic change à la Gioia and Chittipeddi (1991) in pharmaceutical companies. According to Teece (2008, 510), science does not generate the creation of new business models, whereas technology may modify a business models. In fact, the intersection area of cutting-edge research fields (genetics ∩ genomics ∩ proteomics), which drives modern patterns of technological innovation in medicine, is also generating an industrial and R&D corporate change in order to support drug discovery in fast-changing and turbulent (uncertainty and dynamism) markets.

736 M. Coccia Considering this theoretical background, the next section presents a methodology to analyse the likely effects of scientific and technological paradigms on R&D strategic change in the drug discovery industry.


3.

Method and hypothesis

The convergence of research fields in genetics, genomics and proteomics is the backbone for supporting the scientific understanding of disease biology, which represents the background of path-breaking innovations for personalised healthcare. The purpose of this study is to detect the main effects of new technological paradigms, driven by cell and molecular biology, on corporate R&D function and drug discovery process. In particular, the hypothetical–deductive approach of this study, in line with the philosophy of Hempel (1965), is based on the following hypothesis, which I intend to test: Hypothesis: The division of scientific labour to support the drug discovery process (based on a variety of specialised and integrated technological capabilities in an R&D network) is due to technological change in medicine, driven by converging genetics, genomics and proteomics.

The experimental method to test this hypothesis is based on analyses of strategies, organisational and managerial behaviour of some leading pharmaceutical companies (for case study research see: Eisenhardt, 1989; Eisenhardt and Graebner, 2007). Three leading firms (case study) are chosen because they are at forefront of ground-breaking drugs for cancers and other serious diseases. The study here has analysed accurately documents and reports, also available on line, in order to detect the strategic change of the R&D function as a result of technological change in medicine. The effects of scientific and technological paradigms on R&D corporate change are systematised in a framework that pinpoints vital elements and relationships between observed facts. 3.1.

Case study of leading companies in biopharmaceutical industry

In order to test the hypothesis, the study here, in the presence of technological paradigms in medicine (cf. Coccia, 2012a; 2012c; 2013c), analyses the R&D strategic change of three leading firms in the biopharmaceutical industry represented by the AstraZeneca (AZ) Company, the Roche and Boehringer Ingelheim groups. These firms show interesting organisational and managerial features of their strategic change. • AstraZeneca (AZ, Sweden–UK) AstraZeneca is a global biopharmaceutical company born in 1999 from the fusion between Swedish Astra AB and English Zeneca Group. The human and economic resources invested in R&D by AstraZeneca are 15,000 units of personnel and over US$4 billion on R&D annually in eight countries (AstraZeneca 2012). Key therapeutic areas of R&D are: oncology (apoptosis, cell cycle control, proliferation/angiogenesis, immune stimulation, motility/invasion, chemoprevention); cardiovascular/metabolism; central nervous system; gastrointestinal; respiratory/inflammation; pain control


737

and infection. A vital research field is the oncology and the research strategy is based on multiple platforms to attack tumours, including monoclonal antibodies, antibody–drug conjugates, bi-specific antibodies and small molecule chemistry and oligonucleotides.


Process and timing of drug discovery. The discovery phase in AZ is about 4 years to find potential drugs through laboratory research; the development phase is 7 years based on: phase I (small group of volunteers to understand potential new drugs); phase II (small group of patients to evaluate the effectiveness of the medicine); phase III (large group of patients to gather information about effectiveness and safety) and regulatory submission to seek approval from regulatory authorities; post lunch delivering to patients is about 10 years. In short, the length of time of the drug discovery process is roughly 20 years. Capabilities are in the following scientific fields: cardiovascular (diabetes, arterial thrombosis, glaucoma, etc.), gastrointestinal (Crohn’s diseases, ulcerative colitis, etc.); neuroscience (conscious sedation, topical anaesthesia, Parkinson’s disease, Alzheimer’s disease, etc.), oncology (breast cancer, thyroids cancer, bone disorders from bone metastasis, solid tumours; etc.); respiratory and inflammation, etc. R&D corporate strategy is based on smaller and more accountable therapeutic area-focused units to break down technological and economic barriers between early- and late-stage of development. • Roche (Switzerland) The R&D human and economic resources in 2011 were over 18,000 researchers worldwide and about US$10.6 billion. The group had sales of U$56.9 billion. Key therapeutic areas: oncology, virology, inflammation, metabolism and central nervous system. Process and timing of drug discovery. In general, R&D processes are represented by research and early development (target selection; lead generation); clinical development; commercialisation. The medical product needs over 12 years from first discovery. The value chain of the R&D process to support the drug discovery is represented in Table 1. Capabilities. Roche Group has strong capabilities in genomics, molecular and cell biology and is the world leader in-vitro diagnostics, tissue-based cancer diagnostics and a pioneer in diabetes management. Roche supports the interaction between diagnosis and therapy on common ground – the molecular level. According to Roche, molecular diagnostics, discovery and validation of biomarkers9 are essential to realising the promise of personalised healthcare. Corporate strategy in R&D. Roche has built a unique innovation network of independent research and development centres. Genentech (a biotech firm within Roche group) operates Table 1. Value chain of the R&D process by Roche. R&D Investment Hours of work Experiments Researchers Drug Discovery Source: Roche (2012).

US$1,058,249,692.118 7,000,874 6587 423 1

738 M. Coccia as an independent R&D unit. Similarly, the Pharma organisation, in research and early development, enjoys full operational autonomy. Roche and Genentech have more than 150 partner organisations worldwide. This R&D strategy promotes a diversity of research approaches and enables the access to new technologies and promising drug candidates. • Boehringer Ingelheim (Germany) The R&D human and economic resources of Boehringer Ingelheim are more than 7000 highly qualified people. In 2010, Boehringer Ingelheim posted net sales of US$17.8 billion while investing almost 24% of net sales in the largest business segment of prescription medicines.


Key therapeutic areas: R&D focuses on oncology (angiogenesis inhibition, signal transduction and cell-cycle kinase inhibition). R&D in oncology is committed to discover improved medicines to fight against cancers such as lymphoma, solid tumours and leukaemia; respiratory diseases; cardiometabolic diseases; neurological diseases; immunology; and infectious diseases. Process and timing of drug discovery. The drug discovery process is based on the following steps: research (target identification and validation; assay development; lead identification; lead optimisation; pre-development); development (preclinical development, clinical research); registration (regulatory approval); and life cycle management. From initial discovery to a marketable medicine is a long process requiring about 12–15 years and requires an investment of about US$1 billion. On average, from more than a million screened molecules only one is investigated in the late stage clinical trials and is finally made available for patients. Capabilities. Biological sciences (virology, biochemistry, cell and molecular biology, pharmacology and bioinformatics); medicinal chemistry (methodologies to design and synthesise compounds). Structural research (analysis of the 3-D structures of proteins and other biological macromolecules). The drug discovery support (DDS) team works closely with a research team of biologists and medicinal chemists to provide critical information on new chemical entities. The DDS team is multidisciplinary, consisting of specialists in pharmaceutics, pharmacology and pharmacokinetics (PK), including drug absorption, distribution, metabolism and excretion (ADME). Using state-of-the-art robotic stations and highly sensitive bio-analytical methods based on mass spectrometry, this team conducts high throughput ADME-PK trials with high sensitivity and data accuracy. Corporate strategy in R&D. Boehringer Ingelheim conducts R&D in four major R&D locations and three support centres in Europe, America and Asia. Boehringer Ingelheim’s drug discovery is based on interdisciplinary cooperation and effective medicinal chemistry, such as chemoinformatics or efficient biopharmaceutical development. The platform for drug discovery is based on technologies such as e-R&D, high throughput screening or novel biological entities. A comparison of human and economic resources among these three leading firms is represented in Table 2. 4.

Evidence to validate the hypothesis

To test the hypothesis, the study here analyses R&D corporate change of leading firms in biopharmaceutical industry described before.


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Table 2. Comparison of human and economic resources among three leading pharmaceutical firms.


Researchers∗ R&D investments∗ Timing of drug discovery (years) R&D areas

AstraZeneca (UK–Sweden)

Roche (Switzerland)

Boehringer Ingelheim (Germany)

15,000 US$4 billion ≈20

18,000 US$10.6 billion ≈12

7000 US$4 billion 12–15

• Oncology • Cardiovascular/ metabolism • Central nervous system • Gastrointestinal • Respiratory/ inflammation • Pain control • Infection

• • • • •

• Respiratory diseases • Cardiometabolic diseases • Neurological diseases • Immunology • Infectious diseases • Oncology

Oncology Virology Inflammation Metabolism Central nervous system

Note: ∗Approximate values over 2010–2012 period.

• Reorganisation of R&D in AstraZeneca (AZ) because of technological change in biomedical sciences. To be continually at the forefront of ground-breaking research into human disease, AZ has created strategic partnerships with organisations to complement in-house technological and scientific efforts. In particular, AZ builds and reinforces the capabilities by new external sources of innovation based on strategic alliances. In fact, scientific staff has fruitful collaborations with academic institutions, bio-techs and other pharmaceutical companies to share skills, knowledge and resources through all phases of the R&D process. In addition, the improvement and enlargement of the R&D function are also driven by acquisition of biotechnology firms, partnership with public and private R&D labs worldwide. Hence, AZ is boosting external alliances both in pre-clinical discovery and in clinical development phases of innovative drugs (AstraZeneca 2012). This organizational behaviour is due to the impact of new path-breaking innovations, which are generating a division of scientific labour, based on different capabilities, in drug discovery process. • Reorganisation of R&D at Roche because of technological change in biomedical sciences. Roche, in order to support the current drug discoveries in converging genetics, genomics and proteomics, is an active partnering organisation with more than 30% of research projects in the pipeline that have been carried out with strategic alliances. As a matter of fact, Roche has a dynamic role to transform key partnerships into strategic alliances. In addition, the biotechnological firm, Genentech, is a wholly owned member of the Roche Group. R&D function is also reinforced by academic partnerships that seek to propel progress in translational medicine10 and personalised healthcare. The diagnostics division has a R&D network model and strong alliances with companies, universities and research institutions to have the broadest access to innovation. Roche has an advanced information technology system that allows exchange of knowledge across research units around the globe. The research and development units focus on specific disease areas, using numerous strategic technologies to conduct R&D from early discovery and translational medicine to preclinical and clinical development. For instance, it used chip technology to examine thousands of genetic sequences in order to identify genes that are active in diseased tissue but not in healthy tissue. With this technology one can discover the causes of disease as well as support innovative treatments. Roche has also invested early


740 M. Coccia in promising new technologies such as RNA interference (RNAi),11 which offers a method to target and ‘turn off’ specific genes. RNAi-based medicines are a ground-breaking approach to fighting disease and improve the quality of life (Roche 2012). This strategic change, driven by new technological paradigms, is spurring a division of scientific labour to optimize drug discovery process. • Reorganisation of R&D of Boehringer Ingelheim as a result of technological change. The R&D function to support patterns of path-breaking drugs is reinforced by high-throughput and ultra-high-throughput screening. The bridge between industry and academia is strengthened by the Research Institute of Molecular Pathology in Vienna (Austria). The in-house R&D activity is associated with R&D in collaboration with several partnerships such as academic institutions, start-up companies or biotechnological enterprises. Strong alliance management functions at Boehringer Ingelheim ensure high-level commitment to successful execution of partnerships. New marketing alliances have formed with leading companies in biotechnology, such as Genentech, Abbott Laboratories, Glaxo Wellcome, Pfizer and Eli Lilly. A strategic acquisition is the micro-technology company STEAG microParts GmbH. The strategy for the next 10 years foresees Boehringer Ingelheim continuing to research and develop medicines supported by selected acquisitions and strategic alliances (Boehringer-Ingelheim 2012). This R&D strategic change is the effect to cope with new technological paradigms in target therapies that cause a division of scientific labour in drug discovery process.

This strategic change of the R&D corporate function is due to new technological paradigms in medicine based on cell and molecular biology and other patterns of technological innovation. Strategic management literature presents interesting economic topics to explain these partnerships and alliances in pharmaceuticals. First of all, Stolwijk, Ortt and den Hartigh (2013, 1287) claim that the body of knowledge of the joint evolution of the alliance network and technology is growing. Quintana-García and Benavides-Velasco (2011, 1047) show that complementary alliances contribute to the development of both radical and incremental innovation. In particular, collaboration with partners that have similar technologies and competences tend to support incremental innovation, thereby it is important to design a suitable portfolio of R&D alliances in order to develop different innovative competences. Haeussler, Patzelt and Zahra (2012, 217) argue that high technology firms use strategic alliances to gain access to knowledge, resource and capabilities. These strategic alliances on product development depend on the degree of specialisation of new firms’ technological capabilities. Moreover, in pharmaceutical industry the technology learning can be higher when firms have accumulated experiences by alliances and cross-border R&D alliances have the strongest impact on technology learning (Kim and Inkpen, 2005, 313). Dimitri (2008) shows that in the pharmaceutical industry larger companies develop alliances with smaller firms to share stages of drug development processes. He finds that small firms tend to operate in the earlier stages of the research because they are more willing to take risks and to explore new scientific pathways, whereas larger firms could afford the higher development costs. König et al. (2011, 145) argue that the decision to establish new R&D partnerships is based on their marginal revenues and costs, also considering the position they occupy in the network. Xia and Roper (2008, 776) find that continuous R&D plays an important role in determining biopharmaceutical firms’ exploratory alliance activity. Xu (2006, 43) shows interesting results concerning the market reaction to an alliance and in particular the size effect in alliance gains in the pharmaceutical/biotech industry. It is important to note that partners in alliances have to negotiate how


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they will govern, and bargaining power of firms affects the outcome of the negotiation (Bosse and Alvarez 2010, 367; cf. also Billitteri, Lo Nigro and Perrone 2013). In short, the technological wave of molecular biology has generating new technological paradigms of path-breaking drugs. In order to cope with this technological change (likely cause), pharmaceutical companies have a R&D corporate change, which spurs strategic alliances to enhance and accelerate drug discovery process (effect). The latter is based on a division of scientific labour among partners to integrate their capabilities in a cumulative and collective learning within the R&D network (effect). The next section discusses these topics in order to develop a theoretical framework to detect and explain the effects of scientific and technological change on the R&D function of pharmaceutical firms. 5. A theoretical framework and discussion Morlacchi and Nelson (2011, 513) claim that: ‘as the therapy evolves, the principal actors involved in advancing the therapy tend to change as well’. Patterns of technological innovation in biomedical sciences are driven by a fruitful convergence of genomics, genetics and proteomics, which is also affecting corporate R&D with a strategic change to support the drug discovery process. The analysis of the R&D function of leading firms is a main evidence to test and validate the hypothesis and develop a theoretical framework of the effect of technology change on R&D strategic change, drug discovery process and industry. The main impact of converging research fields and technological change in biomedical sciences on the R&D function of firms is represented by the division of scientific labour based on a network organisation to support drug discovery process. This linkage can be schematically summarised in Figure 1 that shows the main relationships between observed facts. Instead, Figure 2 shows the division of scientific labour based on an integrated drug discovery process by a globally linked network R&D organisation. In particular, in this division of scientific labour, the leading firm has two main roles (the square with the round satellite partners in Figure 2): (i) to coordinate different scientific contributions generated within the R&D network; (ii) to integrate in-house technological skills with different specialised scientific capabilities of several R&D partners to support the innovation process of ground-breaking drugs and bio-medical technologies. In other words, because of technological change generated by cell and molecular biology, the R&D function of leading firms tends to acquire an organisational capability of coordinating and

Interaction among genetics, genomics and proteomics that supports new technological paradigms -DRIVERS-

Higher complexity of Drug Discovery process due to specialised scientific competencies in cell and molecular biology

Division of scientific labour in drug discovery process

-EFFECT-

-EFFECT-

R&D corporate change based on strategic alliances (and/or initial key partnerships transformed in alliances) to learn and merge specialised and complementary competencies

Integrated R&D process based on internal and external sources of innovation to accelerate a cumulative learning that support drug discovery process EFFECT-

-EFFECT-

Figure 1. The driving force of new technological paradigms for dividing scientific labour of firms in drug discovery process: Linkages from scientific and technological paradigms in medicine to R&D function change.

742 M. Coccia STRATEGIC CHANGE IN R&D FUNCTION OF FIRMS DRIVERS

Division of scientific labour

KeyPartnership

Strategic Alliances Partners with different competencies that contribute to the R&D Process of the leading firm


In-house R&D for Drug Discovery

TECHNOLOGY CHANGE (Converging genetics, genomics, proteomics, nanotechnology, etc.)

Before Technological Change R&D Process within Individual Firms

DIVISION OF SCIENTIFIC LABOUR THAT GENERATES A R&D NETWORK ORGANISATION

University Interaction in knowledge change

Leading Firm integrates and coordinates internal/ external sources of innovation

Technological Change supports an Integrated R&D Process for drug discovery by a Network Organisation (partnerships, strategic alliances, collaborations...)

Figure 2. R&D function change driven by new technological paradigms in medicine.

integrating different scientific and technological contributions by external partners to accelerate the drug discovery process (cf. Chiesa and Frattini 2009; Huang 2011). Hence, the technological change in the pharmaceutical industry is generating a transition of the drug discovery process from individual firms to a R&D network of firms with different technological skills and capabilities that are integrated in a common value chain. In short, technological change in medicine has generated a division of scientific labour in the R&D process by partnerships and strategic alliances of leading firms with universities and biotechnology firms (see Table 3). The network organisation of the R&D process in drug discovery shows the vital role of complementary scientific competencies by different firms to further support patterns of technological innovation in medicine. This division of scientific labour across internal/external sources of innovation tends to accelerate the timing and learning process for the drug discovery process. This theoretical framework of technological sources of the division of scientific labour in drug discovery process (Figure 1), based on the initial hypothesis, has robust evidence in the R&D strategies of biopharmaceutical firms described before; in fact: • AZ supports partnerships that allow both parties to leverage their unique capabilities and assets to achieve common goals: fruitful technological innovations in medicine. In fact, partnerships are also increasingly focused on sharing risk and reward in order to leverage combined strengths and address complex medical needs. External alliances and partnerships with public and private R&D laboratories have the goal of supporting the pre-clinical discovery and the clinical development phases of drug discovery. A main example is represented by the global collaboration between AstraZeneca and Amgen (a leader in biotechnology) in April 2012 to co-develop and commercialise five monoclonal antibodies from Amgen’s clinical portfolio. The collaboration with Amgen is designed to share risk and leverage each partner’s functional and geographic strengths. This collaboration improves the expertise of AstraZeneca in respiratory and gastrointestinal diseases, whereas Amgen improves commercial experience in rheumatologic and dermatologic diseases. This collaboration marks a new phase in biopharmaceutical business developmentof innovations (AstraZeneca 2012).


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Table 3. Effects of technological change in medicine on R&D function to support drug discovery process. Before technological change

×

During technological change driven by cell and molecular biology

Low complexity of drug discovery process Lower specialisation in biomedical sciences

a a

Drug discovery process carried out In-house individual firms Internal source of innovation within the home country of firms

a

Low external collaborations and strategic alliances for drug discovery process

a

Concentration of drug discovery within the firm and its decentralised R&D units

a

Individual learning process generated by one firm with specific scientific and technological competencies

a

High complexity of drug discovery process Higher specialisation of technological capability in new research fields of genetics, genomics and proteomics Drug discovery carried out by globally-linked R&D network organisation of firms Internal and External sources of innovation, based on an international scale, for R&D labs of firms High collaborations and strategic alliances to support and accelerate drug discovery process Division of scientific labour among several partner-firms for supporting drug discovery process Collective learning process generated by several sources of innovations (partners) with different scientific and technological competencies

a

Note: ×Driving forces that break-out current pathways of medicine.

• Roche has a network of more than 80 independent partners that complement strong pharmaceutical R&D capabilities in-house. Roche creates governance structures that recognise entrepreneurial independence and operational boundaries, ensuring adequate provision of financial and operational resources and allocating fair compensation for respective risks and contributions. Worldwide partnering expands innovation network in the area of in-vitro diagnostics. In addition, Roche and the University of Basel have a strategic alliance to establish and manage the Translational Medicine Research Hub (i.e. to advance understanding of the cellular mechanisms that form the basis of disease and its treatment by bringing together medically oriented basic science and clinical research capabilities, cf. Roche 2012).12 The division harnesses both internally- and externally-generated innovation through licensing deals, partnerships, and collaborations on scientific and commercial basis. These alliances and R&D networks span the globe to ensure that Roche gains access to the most important emerging drugs, technologies and biomarkers. • Boehringer Ingelheim ensures high-level commitment to successful execution of partnerships. Leveraging drug discovery process is based on strategic alliances with leading companies in biotechnology and also strategic acquisition of a micro-technology firm (Boehringer-Ingelheim 2012). This case study of pharmaceutical companies shows the strategic change of the R&D function, owing to technological change in medicine, which reinforces partnerships and strategic alliances mainly with biotechnology and nanotechnology firms. This circumstance generates a division of scientific labour to enhance and accelerate drug discovery process. The underlying elements are that the ‘technological guideposts’ (Sahal 1981, 32–36) lead to groundbreaking technologies and clinical approaches to support rational modes of drug discoveries by integrative capabilities


744 M. Coccia developed in collaboration with biotechnology firms (cf. Henderson 1994, 607ff). In addition, this R&D corporate change is generating a high level of cumulated investment in R&D by selected acquisitions and alliances both in pre-clinical discovery and in clinical development phases of R&D to manage a fruitful division of scientific labour, which enhances the discovery process of path-breaking drugs. However, Florida and Kenney (1990) argue that the R&D corporate change based on a division of scientific labour can cause a fractionalisation of capabilities by spreading scientific and technological expertise, and can increase coordination costs. To sum up, technological change, driven by cell and molecular biology (converging genetics, genomics and proteomics), spurs a R&D corporate change, based on division of scientific labour, shifting from mass-oriented drugs to effective target-oriented treatments for cancer and other serious diseases (personalised healthcare).

6.

Concluding observations

The pace of technological change in biomedical sciences is more and more driven by the convergence of genetics, genomics and proteomics (based on cell and molecular biology) that is generating radical innovations and new technological paradigms (Coccia, 2012a; 2012b; 2012c; 2012f; 2013c; 2014c). The main effects of this technological change in medicine are the division of scientific labour to support the drug discovery process (cf. ‘division of innovative labour’ by Arora and Gambardella 1995; see also Gelijns and Rosenberg 1995a,b; Rosenberg 1983; Rosenberg, Gelijns and Dawkins 1995). This R&D strategic change in medicine determines the shifts of the locus of innovations from individual firms (in-house R&D) to a network of firms (internal/external source of innovation) by strategic alliances and scientific collaborations in order to support path-breaking drugs. In fact, Hage (2011, 53ff) shows that the growth in knowledge leads to a differentiation of research organisations and evolution of new networks to connect those organisations. Globally linked R&D organisation endorses the cross-fertilisation of drug discovery process by the collective and cumulative learning of the network, by the generation of multiplicity of stimuli and the adoption of different and complementary approaches to fruitful support drug discovery process.13 In general, network R&D organisation and integrated R&D process reinforce the technological capabilities of in-house R&D process by external sources of innovation (represented by partnerships and strategic alliances with public and private laboratories operating in biotechnology and nanotechnology). In particular, this corporate R&D strategic change in pharmaceutical industry is based on a vital interaction of partners (within the network) with specialised capabilities in different research fields of the molecular and cell biology. The integration of these complementary competencies in the network R&D organisation, coordinated by the governance of the R&D unit of the leading firm, tends to generate strongly intertwined relationships among partners (firms and universities) that can spur a collective learning and accelerate drug discovery processes (cf. also Morlacchi and Nelson 2011, 521–523; Kim and Nelson 2000).14 In addition, this integration of different and complementary competencies in a common R&D process seems to spur the metabolism of technical knowledge within the R&D network to support patterns of ground-breaking drugs. In fact, the technological and R&D corporate change in medicine have accelerated the drug discovery process by a time-based competition, reducing the time to market to about 4 years (cf. Jain 2000, 318).


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In all, the hypothesis and evidence supplied here provide a degree of closeness to true economic facts and should be considered encouraging to underpin the interesting theoretical framework: new patterns of technological innovation in biomedical sciences are generating a vital strategic change of the corporate R&D based, more and more, on a division of scientific labour to increase the integrating capability that can support the drug discovery process. Hence, technological paradigms in medicine are generating a revolution in markets, industries, firms, R&D function, drug discovery process and clinical practice. However, we know that technological change has an infinite set of consequences in life sciences and markets, and, no economic findings and framework will be true in all situations, in particular when we know that other things are often not equal in current turbulent and fast-running technological change.

Acknowledgements I gratefully acknowledge financial support from the CNR – National Research Council of Italy for my research visits to Yale University in 2011 and Georgia Institute of Technology in 2012, where this research started, and to the University of Strasbourg (BETA), University of Toronto and UNU-MERIT in 2013. The usual disclaimer holds, however.

Notes 1. Genetics studies the molecular structure and function of genes in the context of a cell or organism. 2. Genomics is a discipline in genetics that studies the genomes of organisms. In particular, it determines the entire DNA sequence of organisms and fine-scale genetic mapping efforts. 3. The proteomics is the systematic analysis of protein profiles of tissues and parallels the related field of genomics. 4. “‘model” and “pattern” of solution of selected technological problems, based on selected principles derived from the natural science and on selected material technologies’ (Dosi 1982, 152, original emphasis, cf. also Dosi 1988). 5. See also Coccia (2010a, 2011, 2012a,d,e, 2013), Coccia and Finardi (2012), Amir-Aslani and Mangematin (2010), Mathieu and Van Pottelsberghe de la Potterie (2010), Sabatier, Craig-Kennard and Mangematin (2012) and Heimeriks and Leydesdorff (2012); cf. also Coccia (2012b) for ground-breaking innovations of tissue engineering for cartilage disorders. 6. Pharmacogenetics describes the influence of genes on the efficacy and side effects of drugs; studies interactions between drugs and the genome; investigates the uptake, conversion and breakdown of drugs in the body over time; and deals with the influence of genes on the interactions between drugs and their molecular targets. 7. ‘Strategic change involves an attempt to change the current modes of cognition and action to enable an organisation to take advantage of important opportunities or to cope with consequential environmental threats’ (Gioia and Chittipeddi 1991, 433; cf. Coccia 2008b). 8. In terms of set theory, the area of interaction that supports fruitful radical innovations in medicine is given by: genetics ∩ genomics ∩ proteomics. 9. A biomarker is: “‘A characteristic that is objectively measured and evaluated as an indicator of normal biological processes, pathogenic processes, or pharmacologic responses to therapeutic intervention”’ (National Institute of Health). Cf. Amir-Aslani and Mangematin (2010, 204). 10. ‘The interplay between basic laboratory science and exploratory clinical research. It encompasses preclinical investigations of the biological effects of therapeutics as well as clinical investigations aimed at enhanced understanding of disease biology’ (as defined by Roche 2012; cf. also Gershon 1998). 11. RNA interference (RNAi) is a process within living cells that moderates the activity of their genes. Note that the Cancer Genome Anatomy Project leads some initiatives to support and promote the advancement of RNAi technologies and tools. 12. Compare with Guan and Zhao (2013) for the impact of university–industry collaboration networks on innovation in nanobiopharmaceuticals. 13. External cooperation is also the major driver of innovation in the hospital sector that generates a context of the open nature of innovation (Dias and Escoval 2012). 14. See Coccia (2008a, 2005c, 2004, 2001) for accurate analyses on public R&D units.

746 M. Coccia Notes on contributor


Mario Coccia is an economist at the National Research Council of Italy and visiting professor of Industrial Organization and Economics of Innovation at the University of Piemonte Orientale (Italy). He has been research fellow at the Max Planck Institute of Economics and visiting professor at the Polytechnics of Torino. He has conducted research work at the Georgia Institute of Technology, Yale University, UNU-Maastricht Economic and Social Research Institute on Innovation and Technology (United Nations University-MERIT), University of Maryland (College Park), Bureau d’Économie Théorique et Appliquée (University of Strasbourg), Munk School of Global Affairs (University of Toronto), and Institute for Science and Technology Studies (University of Bielefeld). He has written extensively on Economics of Innovation and Management of Technology; his research publications include more than 250 papers in several disciplines.

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