Present at the biotechnological revolution: transformation of technological identity for a large incumbent pharmaceutical firm

Abstract

Management of successful incumbent firms experience difficulty in recognizing the need for, and effecting change in the firm's technological identity after an externally generated shift in the industry's technological trajectory. Nonetheless, some large pharmaceutical firms have transformed their technological identity in drug discovery from a chemical/random screening to biological/drug design model. We report how one of the world's most successful incumbents transformed. Technically sophisticated senior management championed the transformation. It was achieved primarily through hiring many new scientists embodying biotechnology; existing personnel acquired the expertise or left. Continual self-transformation is part of the corporate ethos. Some differences in incumbent and entrant technology remain: incumbents use a wider range of techniques consistent with their complementary assets. Publication and incentive compensation policies are driven by the need to attract and retain the best scientists. Professor-firm collaborations are ubiquitous, often non-public, and best identified in quantitative analyses by co-publishing. Collaborations with new biotechnology firms are used primarily to substitute for developing internal expertise judged of marginal value. No drug-discovery collaborations exist with other major incumbents. We identify another seven or eight incumbents similarly transforming as indicated by top scientific talent and patenting success.