External collaborations in multinational pharmaceutical companies

Abstract

Traditionally, the internal research and development (R&D) departments of multinational companies (MNCs) have served as a main driver of MNCs innovative capacity. Today’s high pace of change and competitive landscape have forced MNCs however to look beyond their organizational boundaries and to involve external organizations in their R&D for technological advancement and innovation. In particular, MNCs are using R&D collaborations as a means to create and access new knowledge. Collaborations are particularly relevant in science-based sectors such as the pharmaceutical industry where R&D mainly relies on complex and basic scientific knowledge. In this sector, the sources of expertise are widely dispersed and drug discovery and development requires coordination between different actors. The globalization trend has facilitated collaborations across long distances and companies have adopted a combination of long and short distance collaborations in their innovation process.

The role of geographic proximity in collaboration continues to puzzle researchers. In fact, it may be more complex than previously addressed in the literature, most of which has considered external collaborations in a MNC as a homogenous entity in terms of knowledge. A MNC consists of different R&D units that specialize in different research areas and are active at different stages of the innovation process. Furthermore, a MNC collaborates with a large variety of external organizations and individuals. Thus, R&D collaborations in a MNC can be considered heterogeneous in terms of the knowledge and actors involved. The various types of knowledge and actors well differ in how important the role of geographic proximity is for successful collaborations.

This thesis studies the role of geographic proximity in the R&D collaborations of MNCs when creating, accessing and embedding different types of knowledge. In particular, I examine these aspects by differentiating between (1) the nature of knowledge (basic science vs clinical science, core vs explorative knowledge), and (2) the actors involved on the organization level (university, hospital, research institute and company) as well as on the individual level (star scientists). The different levels of analysis describe different aspects of the R&D collaboration and how these affect the internal knowledge of MNCs.

I used co-publications and patents as a proxy for R&D collaborations and analysed the role of geographic proximity using descriptive, social network and econometric analysis. The results show an increasing openness of pharmaceutical MNCs to collaborate over the past 20 years in terms of the organizations and countries involved in drug discovery and development. While the main patents behind innovative drugs are still mainly owned by companies themselves, external organizations increasingly contribute indirectly to knowledge creation, as visible from an increasing proportion of cited patents and publications from external organizations. This substitutes for biotech and pharmaceutical companies decreasing investments in R&D. Furthermore, considering the nature of knowledge, the results show that collaborations in basic science and core knowledge areas are more positively affected by geographic proximity than collaborations within clinical science and knowledge exploration of the MNCs. I also find that different types of actors embed different natures of knowledge. The knowledge accessed by MNCs from universities is more positively affected by geographic proximity during the collaborative process, compared to hospitals or companies. However, highly skilled individual scientists who work at MNCs (star scientists), can help to maintain local collaborations.

Based on these findings I conclude that the role of geographic proximity in R&D collaborations of MNCs varies between the types of collaboration and must be more precisely assessed distinguishing between each R&D collaboration between a MNC and another organization or actor. This thesis underlines the crucial role of R&D collaborations for MNCs and emphasizes the importance of geography for the R&D management of MNCs to create and access knowledge effectively in collaborations. From a policy perspective, the importance of different knowledge types in R&D collaborations should be kept in mind when facilitating the development of R&D collaborations, particularly when local actors are trying to attract foreign MNCs.