Open Innovation: Implementation & Engagement Barriers within the Pharmaceutical Industry

Gerard Jordi Peralta Torres & Erik Kjær Poulsen

Student thesis: Master thesis


Drug discovery and development within the pharmaceutical industry is traditionally conducted independently in research and development (R&D) departments, based on internally developed compounds or in-licensed assets. Due to the current trends such as increasing cost of drug development, price-pressure and generic competition, Open Innovation is proposed as a less expensive and more efficient way of conducting drug development through collaboration-based innovation. Open Innovation models, based on Henry Chesbrough’s framework, is thought to foster incremental innovation and the exchange of complementary know-how between actors including pharmaceutical companies, biotech start-ups and academia. Thus, facilitating reductions of fixed costs within pharmaceutical companies such as in-house R&D expenses, and generating a more agile company structure and strategy. However, a paradigm shift is required to change the current Closed Innovation mindset that is observed in many settings including the pharmaceutical industry. Implementation barriers such as Not-Invented-Here, Not-Sold-Here syndromes and appropriability issues are thought to hamper the adaptation of Open Innovation. The appropriability issue is identified as one of the main reasons for the lack of implementation of Open Innovation within the pharmaceutical industry. Top management of pharmaceutical companies might face the risk of jeopardizing internal IPR and competitive advantages when adopting Open Innovation models with permeable boundaries facilitating a bidirectional flux of knowledge. Collaboration with external partners is hampered by this mindset and operational setting, entailing losses in terms of future gains and innovative endeavors. No recent studies have analyzed the current exploitation and implementation of Open Innovation among the key players of the pharmaceutical industry focusing specifically on compound collaboration. This study aims to map and classify the level of implementation of Open Innovation within the top 100 pharmaceutical companies worldwide through the method of web scraping. Among this target group, seven adaptations within Open Innovation models are identified as compound-specific collaborations. Based on Open Innovation models observed, the criteria and prerequisites of these platforms are analyzed based on their attractiveness for external partners. The purpose of the study is also to identify the main barriers and concerns of collaboration for biotech start-ups. Thus, ten semi-structured interviews with CEOs of European-based biotech start-ups were included in this research. The CEOs are, in general, favorably disposed towards collaboration with pharmaceutical companies within an Open Innovation setting, despite acknowledging concerns and collaboration barriers. The ownership of data generated from the collaboration is generally identified as the biggest concern of the CEOs. However, trust and mutual benefit of the collaboration are mentioned as other important aspects. These findings are discussed in the study based on the current perception of Open Innovation within the pharmaceutical industry. Reflections upon the future implementation of Open Innovation models within the pharmaceutical industry, including measures as the appropriability issue, are also elucidated.

EducationsMSc in Business Administration and Bioentrepreneurship, (Graduate Programme) Final Thesis
Publication date2020
Number of pages67
SupervisorsToke Reichstein & Niclas Nilsson