Towards definition of the global biotechnology value chain using cases from Australian biotechnology SMEs

The generic pharmaceutical value chain model has been employed to describe both the global pharmaceutical and biotechnology industries till now. This research investigates the organisational value chain in Australian biotechnology companies in order to assess the appropriateness of the pharmaceutical value chain to small-and medium-sized biotechnology companies. The main theme of the research is: Can a generic model of the organisational value chain be defined for the biotechnology industry? Emanating from the literature, two research propositions were developed. RP1: there are eight major definable elements/activities of the organisational value chain for the biotechnology industry. RP2: Coverage of the elements in the biotechnology value chain ranges from focused to broad. A multiple case study methodology was used to explore these propositions. To develop a number of case studies, data was collected from senior managers of small and medium Australian biotechnology companies using an interview instrument, as well as from publicly available documentation and through observation. The results were analysed using cross-case comparisons. The results showed that an aggregation of the value chains of each organisation can be reduced to these eight definable elements that constitute the biotechnology value chain: basic research, applied research, development, verification and validation, prototype development, clinical trials, manufacturing and marketing. However, the findings also indicate that these major elements of the value chain need to be further reduced into sub-activities or sub-tasks to cater for the unique differences between biotechnology companies. Generally, the findings were consistent with the literature. However, a wider sampling, including international biotechnology organisations should be studied. The major contribution of this research is in the development of a value chain model, including general sub-tasks, for the Australian biotechnology industry.

The 'parallel bridge' and its relevance to biotechnology new ventures

A firm's competitive strategy and innovation processes are strongly influenced by, and must be responsive to, its competitive environment. This is nowhere more strongly evident than in the high technology industries. In the present work, case studies of biotechnology new ventures are presented. These studies illustrate how an initial market entry strategy of parallel competition (through creative imitation) has enabled several biotechnology start-ups to reduce their mortality risk. We coin the term ''parallel bridge'' to describe this strategy. The parallel bridge provides early cash flows which support research and development and provide time for new ventures to develop core competencies, including a capacity to produce second and third horizon products that will sustain longer term competitiveness.