Christian Garbe at FIZ Frankfurt Biotechnology Innovation Center examines new business models and the role that clusters will play within them
The pharmaceutical industry is riding a wave of change. These changes will have a major influence on the business models and strategies that pharmaceutical companies need to employ. In order to remain competitive, businesses have to improve their R&D productivity, reduce their costs, and tap the potential of emerging economies. However, these measures can rarely be accomplished by one organisation alone; they require collaboration with other organisations from both inside and outside the pharmaceutical sector. Technology clusters enable global collaboration and knowledge transfer between stakeholders in the life sciences industry and beyond.
KEY EMERGING TRENDS & IMPLICATIONS FOR PHARMA
Various factors influence the business environment in which pharmaceutical companies operate. The healthcare bill in Western countries is soaring; as the population ages, new medical needs are emerging and the disease burden of the developing world is increasingly resembling that of the developed world. This synergy of market demand and increase in the overall need for new and better treatments for diseases poses a new strain on drug developers and manufacturers.
Healthcare payers in industrialised economies are already mandating what doctors can prescribe, as patients are beginning to pay a bigger share of healthcare costs. Hence, through media outlets such as educational websites, discussion groups and blogs, patients are becoming better informed about the products available to them, the impact on their health and the existence of alternatives. Moreover, the demand for personalised medicine is increasing. Patients today are generally seeking cures and not treatments for their medical complications. In this regard, the idea of pay-forperformance is on the rise.
Another key trend sweeping through the sector is the emergence of new technologies that provide fresh sources of knowledge. Home surveillance systems, portable devices and implants linked to online and wireless networks will facilitate the monitoring of patients on a real-time basis outside the clinical setting. Increased collaboration with clinics and hospitals, alongside the companies providing the required infrastructure, is needed in order to get access to the data outcomes generated by these new remote monitoring technologies.
On the R&D front, the research base is shifting to non-Organisation for Economic Co-operation and Development (OECD) economies which currently account for a substantial amount of the world’s R&D. The number of patents filed by Asian researchers also increased significantly in the last decade. As a result, the industry will have to establish closer links with the most reputable centres of scientific excellence in both Western and non-OECD countries.
THE ROLE & IMPORTANCE OF CLUSTERS
In order to satisfy the need for more collaboration between organisations in the global life sciences and pharmaceutical sector, a growing trend has emerged, characterised by the development of regional clusters: groups of companies and academic institutions forming partnerships with strategic planners to form geographic groupings with shared interests and facilities.
These specialised clusters enable worldwide business representation and cooperation, while ensuring the concentration of scientific know-how and expertise at specific locations around the world. This in turn makes it easier for companies to locate the necessary resources.
Clusters also serve as a means of creating competitive advantage to attract and maintain corporations and increase economic development and the growth of their regions.
CROSS INNOVATION
High technology industries, such as pharmaceuticals and biotechnologies, are intensive users of R&D that should lead to innovation that will result in gains in market share, the creation of new markets and the efficient use of resources. A technology cluster is the fuel that drives this innovation, since it is consistently building synergies and thereby initiating exchange and new ideas. These will then ideally be transformed into commercially successful products.
Companies moving to established or growing clusters contribute to and benefit from these spillovers. Firms also have, as a result, access to a pool of highly-skilled labour and specialised suppliers that agglomerate in such regions. Also, since technological clusters are located in the vicinity of universities and research institutions, which are hubs for young professionals and basic research, collaboration with these institutions ensures the inflow of research driven ideas from non-industry professionals.
Because these clusters and their surrounding institutions are made up of individuals and organisations from both industry and academia, a more diversified approach to dealing with issues which affect the industry emerges. In research for instance, when companies within a cluster plan to develop new medicines and medical equipment, input and results from nearby universities and research institutions are easily accessible.
Innovation dynamics of companies within clusters are further stimulated by the presence of local competition and the existence of other competing firms in the near vicinity will prompt them to increase the efficiency of their operations. In addition, the exchange of processes involving suppliers, customers and providers of professional services leads to a reduction in R&D costs, as firms are able to generate similar results faster with fewer resources.
PLANNING A TECHNOLOGY CLUSTER
The planning and development of more specialised clusters are underway in various regions across Europe. The first stage of planning and development involves an assessment of a region’s initial situation, enabling the selection of a specialised area of focus and the development of a professional concept. The preparation of a competency profile is the next stage, which is followed by an analysis of the potential business activities within a region. Once this has been completed, plans to begin construction can proceed.
Development of a Professional Concept
A necessary prerequisite for the planning and set-up of a technology cluster is a professional concept with strongly focused content concentrating on a particular business area and particular technologies or research disciplines. Without this professional concept orientating the technology cluster, neither the innovation and growth potentials nor the particular space and infrastructure requirements can be accurately determined.
The professional concept also defines the core of the strategic positioning of a technology centre and takes into account the strengths of the region. It is created based on a feasibility study, which delivers a strength/weakness analysis of the region and points out the competitive situation with respect to other regions. Moreover, it is important to investigate the expansion potential of the individual technology fields of the region.
Within the framework of the professional concept, the expansion options of a technology centre must be put in place, which can be done by providing a variety of building and modular extension possibilities, for example. This will deliver a strong impression of dynamism to the public and supports the reputation of the technology centre as an innovation hub.
Preparation of a Competency Profile
In order to assess the competitiveness of a technology cluster and the technological potential of a region from a scientific viewpoint, a competency profile of the region should be prepared. For this profile, the scientific trends, applications for support, and the self-organisation of the region should be evaluated.
In addition, interviews with university professors, investors, research institute directors and industry managers should be conducted in order to evaluate past, current and future industrial product successes. Based on the findings of this analysis, space and infrastructure requirements in the market may then be assessed.
In the requirements analysis, companies of different sizes, in different development stages and with different experience horizons should be included. This should incorporate entrepreneurs, along with newly established, medium-sized and large companies. This will determine the relevant functional requirements of the cluster, and the buildings that will need to be constructed. In addition, besides the opportunity/risk analysis, contacts are simultaneously made for potential later settlement in the technology centre. The success of a technology centre has been proven to result from a heterogeneous tenant structure of new, established, regional and international companies.
Analysis of Potential Economic Activities
The development of a cluster should address the specific regional conditions and not just imitate structures that have been successful elsewhere. Experience shows that the regional concentration of core competence makes resource pools possible. This is particularly true for worker pools, which ensure that companies have access to qualified workers. Besides management processes, access to specialised law firms, auditors, consulting firms and research facilities also play a central role. In particular, small and medium-sized companies that are still expanding can profit from this.
In order to work out the uniqueness and competitive advantages of a cluster, the potential-analysis should assess the valueadded chains of the region and the activities in technology transfer, while taking into consideration activities that will attract new tenants and the startup of technology companies.
OUTLOOK
In the future, the pharmaceutical sector will be characterised by collaborations, knowledge transfer and interdependency between firms. Firms will need to join forces with a wide range of organisations, from academic institutions, hospitals and technology providers to companies offering compliance programmes, nutritional advice, stress management, physiotherapy, exercise facilities, health screening and other such services.
The key social, economic and technological changes currently taking place in the pharmaceutical and healthcare arena will all necessitate the development of multinational and multidisciplinary networks drawing on a much wider range of skills than the pharmaceutical sector alone can provide. The constraints that previously hindered organisations from collaborating over distance are disappearing, paving the way for the use of new business models based on collaboration and knowledge transfer.
Technology clusters in this regard do and will continue to play a major role in ensuring the success of firms within their agglomerate. Because they provide easy access to expertise and fuel innovation, it is important that the right concept and strategies are used in their development, management and maintenance.
Moreover, since various factors contribute to a successful and well-functioning technology cluster, it is important that measures are taken to understand precisely the environment within which a cluster is to operate prior to its development. In an effort to do so, careful research and analyses of a region must be carried out, and dialogue with stakeholders and decision makers is essential.
