Globalization of pharmaceutical R&D Pharmaceutical R&D governance forms in People's Republic of China

Firm's survival and success, which are dependent on its ability to innovate, to create knowledge and to capitalize on inventions and know-how, is in essence directly linked to its R&D process (Dunk and Kilgore 2001). Especially in technology driven industries, such as the pharmaceuticals, there are significant positive returns to R&D investments through introduction of new or improved products and services (McEvily and Chakravarthy 1999). Technological lead and its transformation to innovative products as fruits of corporate R&D can be seen as monopolistic advantage that helps enterprises to compete in today’s market (Lall 1977). This competitive advantage can be derived from corporation's ability to integrate its activities across geographic locations (Porter 1986). According to Boehe (2008) globalization of R&D can executed with different governance forms: R&D internationalization, R&D offshoring or R&D offshore outsourcing. Globalization of R&D is intervened with the changes in global economy of the 21st century. Some studies argue for its influencing factors to be access to vast skilled labor pools and centers of excellence (Bardhan 2006). Other studies indicate the R&D cost differentials between countries to be the major expected benefit (Norwood et al. 2006). Von Zedtwitz and Gassmann (2002) presented benefits as divided to accessing markets and customers or to accessing local science and technology. This study proposes that based on governance form distinct factor derived benefits can be capitalized. To corroborate or refute factors and their relations on R&D globalization governance forms, an empirical study based on expert interviews of pharmaceutical directors was conducted in the People's Republic of China. The market was found to be the major influencing factor. Local requirements and adaptation were corroborated as factors connected with markets. Furthermore, influencing factors, such as labour, centers of excellence, cost, financial incentives were corroborated together with conditional and risk factors. Furthermore this research argues that the globalization of pharmaceutical R&D is dependent on the financial, scientific and operational requirements of the drug discovery stage. And thus establishes the influence of drug discovery's stages continuum on pharmaceutical R&D globalization. Finally, a R&D globalization governance form decision framework is proposed based on the frameworks presented in literature and author's corroborated empirical findings.