Kellogg on Biotech

Managing Ideas: Commercialization Strategies for Biotechnology (PDF 72 KB / 25 pages)

by Joshua S. Gans, Melbourne Business School, University of Melbourne and Scott Stern, Kellogg School of Management, Northwestern University

Biotechnology promises to provide tremendous value through science-driven innovation. The record of competitive advantage in biotechnology, however, is mixed. Despite a continuing stream of radical innovation and success for a number of “idea factories,” start-up biotechnology firms have yet to overturn the market leadership of established pharmaceutical or agricultural chemical companies. These competitive dynamics result from the commercialization environment facing most biotechnology firms. Specifically, the availability of intellectual property, combined with expertise in regulation and distribution on the part of established players, makes transactions in the “market for ideas” an effective commercialization strategy for most biotechnology innovation. Though some analysts bemoan biotechnology companies’ lack of success in integrating forward and competing with established firms, long-term competitive advantage for most biotechnology firms may best be ensured by developing competencies at idea development alongside strategic cooperation with commercialization partners.