The purpose of this master thesis is to provide an answer the question as to why the biotech business as a whole is incapable of being profitable. Research has shown, that in the lifetime of the biotech business (since the founding of Genentech in 1976), the business has not been able to create a profit. A hypothesis is created which explains the inefficient contracts as an expression of the parties willingness to protect their prior knowledge. The transaction economic bilateral hostage model by Williamson is used to analyze the collaboration agreement as a contract comprised reciprocal investments in specialized assets, in the form of knowledge. Subsequently, a legal analysis of the possibility to renegotiate the collaboration agreement due to changed circumstances. Finally a solution to the problem is presented, that focuses on optimizing the market for knowhow, by creating a contracting model comprised of a mix of governance structures that addresses the different relationship between the contracting parties over time. In the first period after the formation of the contract, the interaction between the parties is based on market norms and should therefore be based on a governance structure comprised of contractual governance. At the same time, a governance structure based on relational governance will be introduced in order to facilitate the emergence of social norms between the parties. Over time, trust and loyalty will develop around relational governance model, making the contractual governance model obsolete. This governance mix will facilitate a high degree of knowledge sharing and joint solution of problems emerging during the collaboration. As a result of this, the collaboration agreements will function more efficiently and become drivers for renewed growth in the business.
|Educations||MSc in Commercial Law, (Graduate Programme) Final Thesis|
|Number of pages||78|