Funding The reduced R&D efficiency makes it necessary for pharmaceutical compani
ID: 373568 • Letter: F
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The reduced R&D efficiency makes it necessary for pharmaceutical companies to realign their R&D concepts. Companies like Merck, Pfizer, Novartis, Bayer aims to be the top innovators in the pharmaceutical industry needs to identify the right growth strategies, need to build up the right core competences for drug R&D internally, need to build external networks with academic partners and service providers and, in particular, need to accept the high costs for product innovation and ensure a sustainable investment in R&D to generate a steady flow of new innovative drugs.
Pharmaceutical companies, which are not counted to be a top innovator, may still be successful when focusing on the growth options that are provided by the generics business and the emerging markets. While the worldwide drug prescription market is forecasted to grow at around 6 % annually between 2015 and 2020, the generics business will grow by 12 % per year in the same time and, already by 2016, it is expected that the pharmaceutical industry is generating around one third of its total sales in the emerging markets . The financial potential in these countries is forecasted to be USD 500 billion by 2020 . As a consequence, some of the multinational pharmaceutical companies have changed their business models from purely research-based pharmaceutical companies that focused on the traditional pharmaceutical markets to more diversified companies and are already generating today a major part of their total revenues outside of Europe, US and Japan by selling both innovative medicine and generic drugs.
Finally, research-based pharmaceutical companies that cannot afford to diversify or to follow the knowledge creator and integrator models need to have an eye on other R&D concepts that are more appropriate for their set-up. Certainly, open innovation has proven to be a concept of significant attention for the pharmaceutical industry. Either it can be used to complement the traditional R&D model to increase the reach of the internal R&D organization, to access external innovation more easily and to reduce R&D costs. Research alliance concepts such as the CTI and crowdsourcing can be ranked as most valuable examples to improve the R&D efficiencies. Or, and applicable for organizations that are more open to a fundamental changes in their R&D models, it is recommended to follow the strategy of the knowledge leverager Shire which has demonstrated that this R&D concept can be translated into enhanced performance [44]. To become a knowledge leverager, pharmaceutical companies need to make the following modifications:i ncrease their absorptive capacities by implementing open innovation processes, hire people who are open-minded, able to work with different cultures and aware that innovation need to be accessed globally, improve their dynamic capabilities and interpersonal skills, form more strategic alliances and active involvements in innovation networks, and develop managerial abilities to better utilize external partnerships.
Explanation / Answer
Topic: The Impacts of Pharmaceutical Firms on the Competitiveness of Developing Nations- Research, analyze, and assess the activities of multinational firms such as Merck, Pfizer, Novartis, and Bayer in transferring technology and funding research and development in developing nations. Identify successful strategies and practices firms employ in supporting science and technology, joint ventures with local firms, and the training of highly skilled personnel. Present recommendations for firms to follow to advance both their commercial interests and the technological competitiveness of the host country.
Companies:
Merck
Pfizer
Novartis
Bayer
I wanted to focus on funding for the companies
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