Optimizing the R&D process using spin-outs: case studies from the pharmaceutical industry: R&D spin-outs can offer an attractive mechanism for increasing the effectiveness and reach of R&D activities while maintaining the focus of the core business. A study of 42 spin-outs in the European pharmaceutical industry reveals the attributes that lead to successful spin-outs and illustrate the possible advantages of spin-outs

OVERVIEW: R&D spin-outs offer pharmaceutical companies an increasingly attractive mechanism for increasing the effectiveness of R&D activities by allowing companies to maintain a clear focus on core activities and yet still exploit discoveries that are less central to the core business. This study analyzed 42 European R&D spin-outs with regard to background, realization, and further development. Interviews were conducted with key personnel in both parent companies and spinouts to explore the underlying strategy and success factors. Key aspects of successful spin-outs are a clear focus on core activities and a cadre of highly motivated employees. The use of spin-outs has resulted in increased activity along the entire pharmaceutical value chain, producing an increase in drugs introduced to the market in recent years. However, spin-outs are also responsible for the disintegration of established value chains, resulting in higher coordination and transaction costs. Spin-outs offer managers a potential option to refocus their activities and reduce costs. The successful examples and potential pitfalls offered here illustrate best practices for managing spin-outs to maximize R&D productivity. KEYWORDS: Spin-outs, Pharmaceutical industry, Outsourcing, Spin-offs, Drug discovery and development
The number of corporate R&D spin-outs in the pharmaceutical industry has increased significantly in recent years (Ramirez and Duberley 2010; Chemmanur and Yan 2004; Dewdney and Smith 1998). This may [...]