Technology uncertainty and technology sourcing

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Int. J. Business Innovation and Research, Vol. 8, No. 5, 2014

Technology uncertainty and technology sourcing: case study of biopharmaceuticals in China Yunzhen Shi and Hao Hu State Key Laboratory of Quality Research in Chinese Medicine, Institute of Chinese Medical Sciences, University of Macau, 2D, Block 2, Av. Padre Tomás Pereira Taipa, Macau, China Macao SAR 999078, China E-mail: [email protected] E-mail: [email protected]

Yitao Wang* State Key Laboratory of Quality Research in Chinese Medicine, Institute of Chinese Medical Sciences, University of Macau, Block 3, Av. Padre Tomás Pereira Taipa, Macao SAR 999078, 406A, China E-mail: [email protected] *Corresponding author Abstract: The aim of this paper is to investigate how Chinese pharmaceutical companies facing technology uncertainty of biopharmaceutical make their decisions of technology sourcing. Through case study of seven representative biopharmaceuticals in China, three types of technology sourcing are identified: type A: Sourcing from internal; type B: Sourcing from internal and external cooperation; type C: Sourcing from external. These three types reflect consistent dynamics between starting point and entry model. Moreover, it demonstrates the impact of technology uncertainty on technology sourcing. Keywords: technology uncertainty; technology sourcing; starting point; entry model; biopharmaceutical; China. Reference to this paper should be made as follows: Shi, Y., Hu, H. and Wang, Y. (2014) ‘Technology uncertainty and technology sourcing: case study of biopharmaceuticals in China’, Int. J. Business Innovation and Research, Vol. 8, No. 5, pp.566–580. Biographical notes: Yunzhen Shi is currently a Master student in Institute of Chinese Medical Sciences, University of Macau. Her present research interest is in the business model of Chinese biopharmaceuticals. Hao Hu is currently an Assistant Professor of Institute of Chinese Medical Sciences, University of Macau. His present research interests are in sectoral innovation strategy of Chinese medicine and industrial standardisation and international identification of Chinese medicine.

Copyright © 2014 Inderscience Enterprises Ltd.

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Yitao Wang is currently a Professor of Institute of Chinese Medical Sciences, University of Macau. His resent research interest is in medicinal administration.

1

Introduction

Biopharmaceutical industry is a technology-intensive industry based on biological technology. While full of much social and economic potentials biotechnological industry is extremely characterised by technology uncertainty in nature (Deeds and Hill, 1999; Casper, 2000; Hagedoorn, 2006). The technology uncertainty embedded in biopharmaceutical leads it to be one of the riskiest businesses, which hinders investment into this industry and slows down R&D activities around the world (Baeyens, et al., 2006). How to meet the challenges of technology uncertainty of biopharmaceutical has been one crucial subject for the future of this industry. Scholars argue that specific business design should be considered to transfer economic value of technology but decrease technology risk (Chesbrough and Rosenbloom, 2002). Especially for emerging biopharmaceutical business technology sourcing should be paid most attention (Holl and Rama, 2012). Different from traditional chemical drug model that relies mostly on internal development capabilities of big pharmas themselves, biopharmaceutical sector is composed of multiple types of actors, particularly small and middle sized biotechnology firms, universities, institutes, and pharmaceutical companies, etc. (Gambardella, 1995; McKelvey et al., 2003; York et al., 2011). Single company usually cannot just depend on own technology capabilities and often has to search biopharmaceutical technology supply from outside (Piachaud, 2005; Zhou, 2007), which makes technology sourcing become decisive for firms to meet the challenges of biopharmaceutical technology uncertainty (Shi et al., 2012). Technology sourcing is concerned about starting point and entry model (Hamel and Prahalad, 1989; Hedman and Kalling, 2003; Van De Vrande et al., 2006). As one of the pharmaging countries, China is attracting more and more attention in the global pharmaceutical sector. Especially, in the biopharmaceutical part China has made impressive progress in product and market development in the past two decades (Frew et al., 2008; Casper, 2000; Casper and Kettler, 2001; Xia and Roper, 2009). In some therapeutic areas China has realised catch-up with the frontiers of global biopharmaceutical pharmas and played leading roles to some extent. Therefore, the development of biopharmaceuticals in China provides an appropriate and unique opportunity. In this paper, we try to investigate how Chinese pharmaceutical companies facing technology uncertainty of biopharmaceutical make their decisions of technology sourcing. Through detailed case study of seven First-Type New Biopharmaceutical Drug (FTNBD) in China, we contribute to understand the interlinkages between starting point and entry model on the one hand. On the other hand our study contributes to enrich the field of technology uncertainty and technology sourcing. Additionally, our study helps to provide new knowledge about business design for biopharmaceutical specifically. This paper is organised as follows. In the next section, we conduct the theoretical review about technology uncertainty and technology sourcing. After that methodology used in this study is reported in details, include case selection, data collection and

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analysis. Then, we report the main findings from case study. Finally, theoretical discussion and conclusions is presented.

2

Theoretical background

2.1 Technology uncertainty Technology uncertainty means the possible results are more than one but what kind of situation will be the state cannot be forecast in advance. As ‘uncertainty’ is often related to ‘ignorant’ and ‘future’ (Lei et al., 2007), technology uncertainty means human’s ignorance of technology’s future development. Technology uncertainty also implies that whether something is scientifically or technologically possible, or whether how to achieve it in practice is not publicly available or deducible by even competent professionals working in the field (Feder, 1980; Ravichandran, 2001; Lei et al., 2007). As uncertainty can be regarded as a combination of dynamics and complexity (Raz et al., 2002; Lei et al., 2007), technology uncertainty can also be understood from these two dimensions. Current social and economic environment changes have led to a renewed interest in technology uncertainty (Friedman, 1998; Kortelainen et al., 2011; Grübler et al., 2002; Jaffe et al., 2003; Grubb et al., 2006). One key feature of the technology-environment nexus is the pervasive presence of uncertainty. One type of uncertainty that has not been considered so far in the literature is uncertainty about the characteristics of new technologies (Goeschl and Perino, 2009). In particular, technology uncertainty is not consistent and stable in all periods of R&D, such as biopharmaceutical. Therefore, when to start involved into a new biopharmaceutical project and how to get a new biopharmaceutical technology within a context of technology uncertainty require further study.

2.2 Technology sourcing: starting point and entry model Firms competing in global markets face the challenge and opportunities from changing scopes of technology, engaging them in extensive and risky sunk R&D expenditures (Veugelers, 1997). Firms can use a target’s technology to supplement or substitute for its own internal research (Ruckman, 2008; Love and Roper, 2009). Past empirical research has suggested that in house R&D and external know-how are complementary and also indicated that different countries has different technology sourcing (Cassiman and Veugelers, 2006; Picker and Leker, 2009; Boujelben and Fedhila, 2010). Own R&D activities allow firms to better scan the environment for existing technology. Once a suitable technology is located, firm with in-house R&D capabilities is better able to evaluate the technology (Cassiman and Veugelers, 2002). It is generally accepted that acquiring a related company will benefit the acquiring company (King et al., 2003), which has been well documented at the industry level (Capon et al., 1988; Harrison et al., 1991; Capron, 1999). The benefits mostly accrue through efficiencies attained from economies of scale in research activities and better evaluation of targets. This can subsequently increase firm value (Higgins and Rodriguez, 2006), innovativeness (Ahuja and Katila, 2001; Prabhu et al., 2005) and R&D effort (Cassiman et al., 2005).


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Since technology could be obtained from internal or external technology sourcing becomes an important factor. Technology sourcing is related to not only starting point but also entry model (Shi et al., 2012). When to start a new biopharmaceutical in the product lifecycle is an essential concern. Starting point characterised the whole life cycle, and different starting points affect the sequent processes obviously (Doz et al., 2000). Besides starting point firms also need to decide how to get the technology. Except internal development of technology, firms could obtain technology from external through multiple mechanisms, such cooperation, direct purchase and M&A, etc. (Higgins and Rodriguez, 2006; Ruckman, 2008; Cefis, 2010), which represents entry model of firm in technology sourcing. When making decisions about technology sourcing firm needs to consider starting point and entry model simultaneously. What’s more, the market entry timing is operationalised by employing the variable of First Mover Orientation (FMO) that measures the likeliness of the firm to enter the market early (Tuppura, 2009). As biopharmaceutical is one kind of emerging technology that just begins to expand its influence on pharmaceutical industry, its impact of technology uncertainty on technology sourcing demands more exploratory investigation.

3

Methodology

3.1 Case study Biopharmaceutical is a biological macromolecule or cellular component, such as a blood used as a pharmaceutical (Soanes et al., 2004) and include blood products (e.g., coagulation factors), vaccines, antibodies, insulin, enzymes, antibiotics, plant extracts (e.g., alkaloids). In this study we selected seven Chinese FTNBDs according to the National List of First-Type New Drugs. Mainly focus on the technological uncertainty starting point, and technology sourcing throughout biopharmaceuticals’ life cycle. According to the Regulations for the Implementation details of Drug Administration Law of the People’s Republic of China, the FTNBD is defined as “attenuated live vaccine and or vaccine, and both domestic and abroad has yet to approve the listing of biological products” (Liu, 2001). On the basis of national conditions, clinical period have to cooperate with hospitals, so in this paper we only focus on preclinical period. These seven biopharmaceuticals belong to seven different Chinese pharmaceutical companies. We chose these biopharmaceutical companies following some original principals, such as, it must own at least Chinese FTNBD; the case drug have a good performance in the past fiscal year; the selected companies have biopharmaceutical business; included both listed companies and unlisted companies; we tried to choose varied ownerships (state owned, private, sino-foreign joint venture); the geographical distribution of a wide level of complexity of organisation. The backgrounds information of these seven companies are summarised into Table 1. As shown in Table 1 only four companies just focus on biopharmaceutical business, the other three companies have chemical drug business. All the simple companies have certificates of good manufacturing practice (GMP), implying all of them enjoy enough production capability. Six companies were founded after 1980s when biopharmaceutical industry just started up in China. Most of these companies have over 900 employees.

Private

Public (NASDAQ)

Private

SOE, Parent company is listed on SSE

Public (SSE)

Private

Sunway Biotech

Simcere

Xiehe

Dong-e E-jiao

Huasun

Sibiono

1998

1998

1952

1988

1995

2005

2000

Founding year

904

5,665

17,000

5,000

70

50

Employees

Biopharmaceutical, and gene therapy

Biopharmaceutical, Chinese and Western medicine, veterinary drug, veterinary biological vaccine, and steel structure production

Chinese patent medicine, health care product, and biopharmaceutical

Biopharmaceutical, healthcare product, and Chinese medicine

Biochemical drug

Biopharmaceutical

Biopharmaceutical, and McAb

Main business

Recombinant Human Ad-p53 Injection (Gendicine®)

Skin Test Preparation for Iodine [131I] Metuximab

Recombinant Human Interleukin-11 (I) for Injection; Recombinant Human Erythropoietin Injection (CHO Cell)

Staphylococcal Enterotoxin C Injection Highly (Agglutinative Staphylococcin®)

Recombinant Human Endostatin (Endu®); Edaravone Injection (Bicun®); Biapenem for Injection (Anxin®), etc.

Recombinant Human Adenovirus Type 5 Injection (Oncorine ®); Recombinant Human Granulocyte Colony-stimulating Factor Injection (SunGran®)

Nimotuzumab Injection

Main products/technologies

R&D, manufacturing, and sale

R&D, manufacture, and sale

R&D, manufacture, and sale

R&D, and manufacture, commerce

Manufacture, R&D, and sale

Biogen preclinical research, drug test, clinical test, production and sales

McAb R&D

Bio-services provided

GMP

GMP, GSP

GMP, ISO9001, ISO14001

GMP, ISO9001

GMP

GMP

GMP (Guba)

Certifications

Notes: *McAb: monoclonal antibody; GMP: good manufacturing practice; GSP: good supplying practice; SOE: state owned enterprise; NASDAQ: National Association of Securities Dealers Automated Quotations system; SSE: Shanghai Stock Exchange; SZSE: Shenzhen Stock Exchange.

Private

Biotech Pharma

Ownership

Table 1

Firm

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Firms interviewed and their product/ technology portfolios

Head and neck cancer, colorectal cancer, neuroglioma, non-small cell lung cancer, etc.

Target disease

Oncorine

Head and neck cancer

2006

Sunway Biotech Non-small cell lung cancer

2006

Simcere

Endu

Recombinant Human Endostatin

Lung cancer, liver cancer, breast cancer, nasopharynx cancer and digestive system cancers, etc.

1999

Xiehe

Gaojusheng

Staphylococcal Enterotoxin C Injection

PHC

2008

Dong-e E-jiao

Baijieyi

Recombinant Human Interleukin-11 (I) Injection

Notes: *McAb: monoclonal antibody; CCMI: Cuba Center for Molecular Immunology; PHC: Primary Hepatocellular Carcinoma.

2008

company

Time to market

Nimotuzumab

Biotech Pharma

Brand name

Recombinant Human Adenovirus Type 5 Injection

Liver cancer

2007

Huasun

Likating

Iodine [131I] Metuximab Injection

Nasopharynx cancer

2004

Sibiono

Jinyousheng

Recombinant Human Ad-p53 Injection

Table 2


Technology uncertainty and technology sourcing Background seven biopharmaceutical products

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Table 2 summarises the background of information of seven case biopharmaceuticals. All come to the market after 2004 except Staphylococcal Enterotoxin C Injection. Their cure diseases are high-risk cancers, head and neck cancer, lung cancer, liver cancer, primary hepatocellular carcinoma (PHC), nasopharynx cancer.

3.2 Data collection Follow the suggestions by Eisenhardt (1989), multiple sources are used to collect data, including interviews, observations, and archives. From 2011 to 2012 we visited the seven sample companies and interviewed their CEO, leaders of firm research institute, R&D engineers and marketing managers. Interviews are mainly about the background of company and FTNBDs. On the basis of data and materials from multiple resources, we analysed the data from three main themes: technology uncertainty, starting point and entry model. In the coming sections, we report each case at first and present analysis discussion according to three themes later.

4

Main findings

As showed in Table 3, seven biopharmaceuticals can be categorised into three types according to their technology sourcing: Type A: Sourcing from internal. Type B: Sourcing from internal and external cooperation. Type C: sourcing from external.

4.1 Type A: Sourcing from internal Oncorine (Recombinant Human Adenovirus Type 5 Injection) is the first oncolytic virus drug that was approved in the world. The optimal clinical treatment regimens are head and neck cancer, lung cancer, liver cancer, malignant pleural and peritoneal effusions, pancreatic cancer. Oncorine is a recombinant virus deleting E1B and E3 region gene fragment of human adenovirus type 5 (a common cold virus but low virulence). Oncorine has an American brother named Onyx-015, was development by Onyx Company. It was the world first oncolytic virus drug approved for sale. However, Onyx Company announced a pause Onyx-015 project after phase II clinical trials because of the technological uncertainty and the lack of financial support. The CEO of SunwayBiotech CEO brought the core technology of Oncorine from aboard and set up SunwayBiotech by himself in 2005. So, the company starts the project from the earliest drug discovery stage and completed the whole R&D and marketing work by itself. Therefore the company holds independent intellectual property of this biopharmaceutical product, including 4 Chinese patents, one Patent Cooperation Treaty (PCT) patent, and seven US patents. The model of Oncorine model is a typical internal sourcing type: starting point is at the basic research and entry model is internally dependent.

Internal and external in China, Cuba, Canada and Germany

Technology source (clinical trials: I, II, III, VI)

Internal

M&A

M&A

Basic research

Protein engineering technology

Sun Yat-sen The National Clinical University Cancer Trial Center for New Center, Jiangsu Drugs (Oncology) at Provincial Tumor Cancer Hospital, Hospital, The Second Chinese Academy of Medical Sciences, etc. Hospital of Dalian Medical University, etc.

Internal and external

Internal; from 1996

Internal

Basic research

Gene recombination


The first Clinical Medical Hospital of China Medical University, etc.

Internal

Internal; from 1989

Internal

Basic research

Biological extraction technology

Staphylococcal Enterotoxin C Injection

Cooperation

Cell Engineering Research Center, Fourth Military Medical University, Xi’an

GuiZhou YiBai Pharmaceutical Co., Ltd.; Department of Abdominal Surgical Oncology, Cancer Hospital (Institute), Chinese Academy of Medical Sciences, Peking Union Medical College, etc.

External

External

Drug discovery

Gene recombination


Internal and outsourcing

Internal; from 1999

Internal

Basic research

Protein engineering technology

Recombinant Human Interleukin-11 (I) Injection

Notes: *McAb: monoclonal antibody; CCMI: Cuba Center for Molecular Immunology; PHC: Primary Hepatocellular Carcinom.

CCMI, etc.

Internal and external; from 2000

Technology source (preclinical trials)

Partners

Drug discovery

Internal and external

Entry model

Humanized McAb

Starting point

Core technology

Recombinant Human Adenovirus Type 5 Injection

Cancer Institute, Peking Union Medical College

Internal

Internal; from 1998

Internal

Basic research

Gene recombination

Recombinant Human Ad-p53 Injection

Table 3


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4.2 Type B: Sourcing from internal and external cooperation Nimotuzumab (Nimotuzumab Injection) is one of the successful McAb in China with highly humanise, target at the epidermal growth factor receptor (EGFR). The therapeutic areas of Nimotuzumab are head and neck squamous cell carcinoma (HNSCC) and colorectal cancer. In the 1970s, McAb appeared in academia. Based on the principles of immunology and antibody in vitro amplification techniques to produce the therapeutic antibodies primarily for tumour therapy (Reichert and Valge-Archer, 2007; van Dongen, et al., 2007), McAb is the most important part in the bio-pharmaceutical system (Oldham and Dillman, 2008). Unlike chemical drugs, Chinese bio-pharmaceutical technology is not as far behind the world’s pharmaceutical levels due to its world-class gene technology. Some of Chinese McAb products have already taken a leading position, among which Nimotuzumab is a representative. It is the world’s first monoclonal antibody radioimmunoassay targeted drugs for the liver cancer and the first target at EGFR in humanised McAb in the world. The company leader decided to start a business since 1998 when he was a 50 years old civil servant. In those days, he had some opportunities to go aboard and knew Cuba owned a world leading McAb technology. He realised this technology could save a lot of people and China also needed it. He mapped out a cooperation plan. With the support of Chinese Government, he reached a cooperation relationship with Cuba Government and got involved into the biopharmaceutical development at early stage. The company took responsibility for the whole value chain and realised impressive market performance. Nimotuzumab model is an internal and external sourcing type: starting point is at the drug discovery and entry model is cooperation. This model reduces cost and money and also disperses the risk.

4.3 Type C: Sourcing from external We categorised two representatives into type C for different technology sources: one is M&A (Endu); the other is direct purchase of potential project (Likating). They all belong to type C but they have a different source path on product chain.

4.3.1 Endu (Recombinant Human Endostatin) Endu is a novel biological product inhibiting angiogenesis. It blocks the metastasis of endothelial cells involved in angiogenesis, inhibits the formation of new blood vessels, obstructs the nutrition supply to tumour cells, and in results inhibiting the proliferation or metastasis of cancerous cells. In 1970s Harvard professor Judah Folkman discovered the famous ‘starve to death tumor therapy’ and found Endostatin but unable to mass production, so they gave Endostatin up. The predecessor of Endu is Endostatin, which was developed by a Maryland biotech company – EntreMed. They all belong to the recombinant human vascular endothelial protein inhibin class, can inhibit tumour angiogenic, and then to ‘strangle’ the tumour. In 2003, EntreMed announced they had to end Endostatin before the II clinical R&D.


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In 1998, the company founder and his team decided to develop Endostatin and then they got Endostatin’s national new drug certificate after eight years. Simcere completed the merger and acquisition of Luo Yongzhang’s company (Yantai Medgenn Co., Ltd.) and the whole production chain of Endu in May, 2006. After two months, Endu officially went on sale. Endu model is special but successful case external sourcing type: starting point is at the basic research and entry model is external. Simcere started Endu at marketing. It shows an M&A way to own a new drug based in a win-win situation.

4.3.2 Likating (Iodine [131I] Metuximab Injection) Likating is Murine McAb and the first lung cancer radiation immune targeted therapy in the world. It has a significant effect on patients with advanced lung cancer that failed in radiotherapy and chemotherapy. Likating is honoured as ‘human’s first needle of liver cancer targeted drug’ and worthy of the ‘Hepatoma oriented nuclear bomb drug’ in China. Likating is an iodine 131I marked new McAb used to guide liver cancer radiation therapy. Huasun bought the project of Likating from the Cell Engineering Research Center of Fourth Military Medical University (Xi’an) in 2001. Following the purchase, Huasun and the Cell Engineering Research Center finished the first three phases of clinical trials. Likating model is a popular external sourcing type: starting point is at the drug discovery and entry model is completely external. Huasun started Likating at the new drug application. It’s a high efficiency model in Chinese pharmaceutical industry – the combination of ‘production, teaching and research’.

5

Discussion and conclusions

Factors that may affect the input point of the pipeline are set in motion and the biopharmaceutical industry is experiencing evolutionary stress that is evident in all the phases of product lifecycle, especially R&D (Milne, 2008). It requires a more careful choice of starting point and entry model for biopharmaceuticals. The starting point of seven biopharmaceuticals is summarised into Figure 1 according to scholars’ previous work of defining drug lifecycle, including drug discovery, basic research, drug development, clinical research (I, II, III), new drug application, manufacturing, marketing, clinical research VI (Grabowski et al., 2002; DiMasi and Grabowski, 2007; Xu, 2010). In Figure 1, Nimotuzumab and Likating started from drug discovery, but Huasun participated in Likating from clinical research. Other five FTNBDs started from basic research. However there is an exception as well, Endu’s current owner (Simcere) begins its business from marketing. From Figure 1 some relationships among technology uncertainty, starting point and entry model are worth further discussion. The standard process of biopharmaceutical R&D consists of two steps: preclinical trial and clinical trial (Varawalla, 2007). Firms can decide to enter into any biopharmaceutical project at different stage, which is also related to its entry model. In our three types of technology sourcing, type A has the earliest starting point and completely internal reliance. Comparatively, type C holds the latest starting point and has to make use of M&A or direct purchase to get biopharmaceutical project. It means that the late of starting point is related to more external and more market-oriented entry model of obtaining technology. Radically, new

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technologies, like biopharmaceutical, are generally sourced by new entrants (Tushman and Rosenkopf, 1992). Literature has indicated that external technology sourcing in earlier technology life cycle has stronger effect (Stolwijk et al., 2012). Our findings further shows that although earlier involvement can bring more benefits it must be evaluated with consideration of entry model. Figure 1

Starting point of seven biopharmaceuticals (see online version for colours)

Recombinant Human Adenovirus Type 5 Injection; Recombinant Human Ad-p53 Injection


Nimotuzumab Injection; Iodine [131I] Metuximab Injection

Staphylococcal Enterotoxin C Injection; Recombinant Human Interleukin-11 (I) Injection



Notes: *The dashed box means where to start a new drug in China; the solid box means when the company, which is now own the new drug, participated in the life cycle of the new drug.

Besides internal dynamics between starting point and entry model we can also observe the relationship between technology uncertainty and technology sourcing. In type A internal sourcing is applied because the technology is much developed and mastered with less technology uncertainty. In Type B firms the technology is developed to some extent but still has some uncertainty, which resulted into choice of cooperation sourcing. On the contrary in type C the biopharmaceutical technology is completely new and unfamiliar for firms. Facing greatest technology uncertainty they have to rely on external sourcing. Consequently, the more technology uncertainty leads to more reliance on external sourcing. This paper adds to the literature on the relationship between technology uncertainty and technology sourcing through detailed case study of FTNBDs in China. It not only helps to understand the dynamics of starting point and entry model but also enriches the field of technology uncertainty on technology sourcing. Besides, it provides some meaningful references to business design of emerging biopharmaceutical business around the world. Specifically to the research and practice of dealing with technology uncertainty, there are another three important implications from this study worth of note. Firstly, internal R&D capabilities are the key factors to influencing starting point and entry model. Internal technology sourcing focuses on the core technological capabilities of a firm (Kessler et al., 2002) and thereby results in technology improvement. Different companies have different strategic positioning. Some biopharmaceutical companies spend a lot on R&D section because they position themselves into R&D-oriented companies and vice versa. For example, Xiehe Group has much ability to innovate and focuses on biopharmaceutical R&D. Same as Sunway and Sibiono. Before 2008, Sunway


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had an enormous R&D investment. More than one third of company’s total spending and nearly half of employees had been put into R&D. These internal capabilities will influence their judgement and decisions about technology sourcing significantly. Secondly, the regulation of pharmaceutical markets play significant institutional role. Government policy is an important concern in many countries and is generally undertaken with cost containment, efficiency, quality and equity objectives in mind (Mossialos and Oliver, 2005). The Government of China wants to develop the domestic pharmaceutical industry (Sun et al., 2008). The drastic growth of the pharmaceutical industry resulted from the central government’s policy which officially sets it as one of emerging industries for leaping development. Such as, Nimotuzumab and Jinyousheng (Recombinant Human Ad-p53 Injection) are by the grace of the government. Central government has provided a lot of support to Biotech Pharm’s relationship with its Cuba partner. Or like Shenzhen Government invested a lot of money to help Sibiono develop Jinyousheng. Thirdly, financial resources are becoming more and more influential in deciding technology sourcing. R&D costs in the biopharmaceutical industry in general are rising and competition is becoming keener (Heinonen and Sandberg, 2008). Managers have a broader range of optional projects, allowing them to get both private benefits and better projects (Guedj and Scharfstein, 2004). An estimated average out-of- pocket cost per new drug is US$ 403 million (DiMasi et al., 2003). So, financial resources could help a company to obtain more advanced biopharmaceutical products in a more efficient way. Typically Simcere was listed on the New York Stock Exchange, which provided it economic capability to acquire Yantai Medgenn Company to get the whole production chain of Endu.

Acknowledgements This study is supported by the research funding of University of Macau (MYRG160(Y1-L2)-ICMS11-HH).

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