Innovation in the pharmaceutical industry: a family firms' multi case study Presentation of new opportunities offered by the Chinese pharmaceutical market

Abstract

This dissertation is aimed at presenting the complex and much debated topic of innovation in the evolving context of pharmaceuticals, with a special focus on pharmaceutical family driven firms. The first chapter presents a complete analysis of family driven firms’ environment. At first, we will provide the theoretical framework around the family firm, introducing the heterogeneous definitions produced by the literature during the last decades, highlighting, in the end, the specificity and uniqueness of the role of past in family driven firms and the main differences between the family and the founder firm. Then, starting from the assumption that R&D is considered to be the preferential resource to feed innovation, the relationship existing between the family firm’s orientation toward innovation and its investment in R&D will be shown, in order to study family firm’s willingness to invest in this field and its behavior in doing so. A great contradiction here emerges: the family firm is strongly devoted to the pursuing of firm’s success above all in order to preserve its survival for future generations, but analyzing the trend, it emerges that family firms are less willing to invest in long-term projects, that could lead to long-run advantages, due to their degree of risk and uncertainty. To solve the investment ability-willingness contradiction in family firms and unlock their innovation potential, we will introduce a possible solution, the family driven innovation, based on the necessity to find a fit between the family firm dimensions and its strategic dimensions pursuing innovation. The second chapter provides an insight in the pharmaceutical industry on a worldwide basis, followed by a brief history of patents, their pros and their cons. Then, an insight in R&D productivity and its decline is analyzed together with some solutions that are put forward. From these acknowledgments, under the lens of the pharmaceutical industry, starts a crucial analysis on innovation, seen as the indispensable and crucial resource contributing to the survival of this industry. In this respect, the paradigm of open innovation is pointed out as an important strategy most likely to drive pharmaceutical industry to growth. The last part of the chapter is a pragmatic and analytical study conducted on four of the greatest Italian family driven pharmaceutical firms, with the ultimate goal to gain a deep understanding and a wide-ranging acknowledgment of their behavior and strategies in the challenging research for innovation. The analysis is window on those firms’ R&D approach and innovation pursuing process and it will lead the dissertation to conclude that the promising and innovative Chinese pharmaceutical market is still not part of their R&D investments agenda. The third chapter, hence, is aimed at proposing a detailed framework of the Chinese pharmaceutical market with its innovative strategies and promising horizons, in order to show how fruitful could be for foreign pharmaceutical firms to direct their R&D investments toward this market and possibly encouraging them to do so.