BREAKTHROUGH INNOVATION IN THE BIOPHARMACEUTICAL INDUSTRY: AN EXAMINATION OF STRATEGIC NETWORK ALLIANCES AND THE IMPACT ON SHAREHOLDER VALUE

Abstract

The road to breakthrough innovation is complicated, lengthy, costly, and risky to shareholders. This research examines the literature for breakthrough innovation across several industries and disciplines to provide a holistic definition of breakthrough innovation for the biopharmaceutical industry in order to best explore the relationship between breakthrough innovation, knowledge sharing, strategic network alliances, and shareholder value. The study design uses multiple-case studies: a small pilot case study, a second in-depth case study, and a third case study that examines the challenges of breakthrough innovation from senior executives perceptive. Our findings provide three new insights of breakthrough innovation. First, we formulate a new model of breakthrough innovation utilizing strategic network alliances centered on small companies focused on the early phases of development, while larger firms leverage their global commercial infrastructures. Interwoven in the new strategic alliance network are venture capital firms, academia, and government. The second finding is that industry executives prefer the approach of knowledge sharing within a formal strategic network alliance due to the confidential framework of the relationship. The third finding is that incremental innovation is a necessary building block toward breakthrough innovation. The relationship of strategic network alliances and knowledge sharing to breakthrough innovation in the biopharmaceutical industry are critical. Finally, a review of breakthrough innovation factors having the most significant positive impact on maximizing shareholder value in the biopharmaceutical industry.