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Research Summary: In this paper, we suggest that staffing decisions in R&D alliances can reduce the inherent tension between value creation and value protection faced by participating firms. By considering R&D workers a primary source of knowledge leakage, we analyze the role of their intellectual property (IP) protection in shaping the misappropriation threat posed by the partner. We rely on patent ownership and inventorship data to analyze the selection of individuals for R&D collaborations in the pharmaceutical industry between 1991 and 2010. Our results suggest that an inventor's strength of IP protection is an important determinant in allocation decisions since it contributes to offsetting leakage risks in the alliance. The effect is especially strong in alliances that anticipate higher hazards. Managerial Summary The literature argues that firms can reap many benefits from R&D collaborations. However, such activities are challenging to manage because they require firms to put valuable knowledge at risk of misappropriation by the partner. We draw attention to the role that inventors play in generating and channeling knowledge during collaborative work and posit that the strength of the IP protection covering their innovations can safeguard against the consequences of knowledge leakage. We analyze pharmaceutical alliances and find that managers are more prone to allocate to collaborations inventors whose knowledge is better protected, particularly when the alliance anticipates considerable misappropriation risks. Our study has implications for how firms allocate inventors across projects, which may be an important factor for the overall success of firms' R&D strategies. [ABSTRACT FROM AUTHOR]

We examine the impact of geographic location of alliance activities on the design of safeguards in contracts governing research and development (R&D) partnerships. Joining research on agglomeration and alliance governance, we argue that the Marshallian agglomerative forces at work in a given location produce governance-related externalities that extend beyond productivity-related externalities considered in previous research. We investigate how location characteristics linked to Marshallian forces, such as local knowledge spillovers, R&D rivalry, dense industry employment, and the strength of professional organizations, have an impact on the specification of formal governance mechanisms. In particular, these Marshallian forces have a bearing on formal governance mechanisms that safeguard the execution of the R&D partnership, such as joint administrative interfaces and termination provisions. We analyze R&D partnerships between biotechnology and pharmaceutical firms and find that misappropriation hazards arising from greater knowledge spillovers and R&D competition in the region where R&D activities are located promote the use of these formal governance mechanisms in R&D partnerships. We also find that factors supporting thick interpersonal networks, such as the intensity of sectoral employment and the strength of professional bodies, reduce the use of formal governance mechanisms in R&D partnerships. [ABSTRACT FROM AUTHOR]

We examine how new biotechnology firms (NBFs) select pharmaceutical firms as R&D allies as a function of value creation and value appropriation considerations. We develop a theoretical framework to understand partnering decisions accounting for both, a potential partner's ability as well as incentives to appropriate and create value within an R&D alliance. Our empirical findings show that NBFs are more likely to ally with pharmaceutical firms with the ability to create value, as long as these firms have the incentives to use their skills to create rather than appropriate value. Our study highlights the double-edged sword nature of value creation skills and provides a deeper understanding into the contextual factors that determine when potential R&D partners will perceive such skills as increasing appropriation risks. Copyright © 2012 John Wiley & Sons, Ltd. [ABSTRACT FROM AUTHOR]

We use the event study methodology to investigate the share price responses to the formation of 281 partnerships in the biotechnology/pharmaceutical industry over the years 1995–2000. The average stock price response is positive, more so than in previous empirical works, which could be interpreted as evidence that interfirm collaboration is particularly valuable in high-technology industries. Research and development (R&D) partnerships also generate higher abnormal returns (relative to production or marketing agreements). On average, smaller firms in the partnership seem to appropriate a very significant share of the cooperative surplus, especially when they receive large technology payments or when the partnership is concluded in the R&D stage. On the other hand, partnership announcements of more profitable firms tend to be associated with higher abnormal returns. [ABSTRACT FROM AUTHOR]

Presents a study examined the return on research and development (R&D) versus capital expenditures in pharmaceutical and chemical industries. Relationships between R&D spending level and measures of company performance for actual firms in pharmaceutical and chemical industries; Positive associations of R&D intensity and all variables of firm performance; Findings on the effectiveness of R&D and new drug introductions in pharmaceutical and chemical industries.

We examine whether knowledge spillovers from MNCs' local R&D activities benefit domestic firms in the Indian pharmaceutical industry from 1980-i994. In a policy environment that restricted FDI and provided weak intellectual property protection, we find that the only significant R&D spillovers in the Indian pharmaceutical sector were between MNCs and each other. We explore the implications of our findings in light of India's economic and industrial policy goals and implementation. [ABSTRACT FROM AUTHOR]

Examines the benefits and costs of research collaborations for multi-national research oriented pharmaceutical firms. Review of existing literature on the issues related to research collaborations; Technologies associated with research collaborations; Projection on the future trend of research collaborations among multi-national pharmaceutical firms.

Open-source R&D initiatives are multiplying across biomedical research. Some of them—such as public–private partnerships—have achieved notable success in bringing new drugs to market economically, whereas others reflect the pharmaceutical industry’s efforts to retool its R&D model. Is open innovation the answer to the innovation crisis? This Commentary argues that although it may likely be part of the solution, significant cultural, scientific, and regulatory barriers can prevent it from delivering on its promise. [ABSTRACT FROM AUTHOR]

The article reports on issues that surround the Innovative Medicines Initiative (IMI) that was launched in 2007 by the European Union (EU) to help the pharmaceutical industry through bringing together public and private researchers to speed up drug development. It mentions that universities and public research institutes complain the cost of participation and the raw deal on intellectual property. It also states that universities complain as they only claim 20% of the indirect cost of a project.

The article announces scientists tasked to undertake the cancer therapies experiments in London, England. The Cancer Research UK (CRUK) announces that Nicol Keith's team of the University of Glasgow will focus on cell senescence, a mechanism by which aging cells stop dividing. These scientists will collaborate with pharmaceutical companies on cancer therapy wherein they will receive $1 million grant for 2 years. It states that the handpicked teams will include five experts from different fields of study. CRUK hopes industrial partners will take the therapies to market.

Emphasizes the need to support the early stages of the research and development phase of the biotechnology industry from pharmaceutical companies. Problems presented by the drug companies' preference for late-stage product opportunities; Importance of creating funding opportunities for academic institutions;Sources of income for the university.

In this paper, we discuss the R&D process in the pharmaceutical/biotechnology industry from the viewpoint of four leading Canadian biotech startups. Based on a series of interviews with these firms, we outline the role of joint ventures and strategic alliances with university laboratories and with large established pharmaceutical firms in furthering these small firms' ambition of themselves becoming large and established. We find that the evolution of this industry has made this goal much harder to reach and we discuss the creative ways in which these firms have adapted and thrived. [ABSTRACT FROM AUTHOR]