Canada-India firm collaboration in health biotechnology
MetadataShow full item record
Strategic alliances are of critical importance to firms working in the health biotechnology2 field. Collaborations can provide firms with significant competitive advantages, shape their economic performance and help minimize risks in development activities (Hagedoorn, 1993). Alliances in the biotechnology sector can be of various types. Biotechnology firms rely on alliances with pharmaceutical firms for successful development and commercialization of lead products. Alliances with universities and government research institutions can be a source of basic knowledge crucial for competing in patent races. Finally, alliances with other biotechnology firms can enable learning with regards to operating and thriving in the health biotechnology sector (Baum et al., 2000). It does not pay to be an island in today’s health biotechnology landscape and collaborative arrangements have become dominant strategies by firms to gain innovative product and process ideas. There has been a dramatic rise in biotechnology collaboration since the end of the last decade. Along with rising partnering in the field, there is also the growing globalization of the biotechnology industry; firms are increasingly aware that successful innovation requires partnerships not only nationally, but also with international players. However, until the early 2000s the propensity to internationalize was mostly by biotechnology firms in developed countries, particularly the triad of the US, Europe and Japan (Buctuanon, 2001). But transformations taking place in the global life sciences sector may prove to be disrupters to this trend and collaborations in health biotechnology can increasingly include firms from developing countries3. In recent years, developing countries such as India, China and Brazil have been investing into their local health biotechnology sector and encouraging growth of domestic firms in this field. They have been able to build substantial capabilities in face of steep barriers to entry (Thorsteinsdóttir et al., 2004; Frew et al., 2007; Rezaie et al., 2008). At the same time, the blockbuster drug development model dominant in North America and Europe is experiencing problems of maturity – including dwindling product pipelines and patent expiration (Chataway et al., 2007; Frantz, 2005). In view of these shifts, one response to promote future innovation in this field may be for northern firms to reach out to southern partners in search of novel technologies as well as to contract out development activities to minimize costs. Playing a larger role in global health biotechnology networks can benefit firms in developing countries to strengthen their own innovation potential (Chataway et al., 2007). Serious transformations are taking place globally in the pharmaceutical industry and as a result, firms in developed and developing countries have to reconsider their roles in the sector. Although the potential benefits of north-south collaboration in health biotechnology are significant, there is relatively little known about such types of partnerships and how to best encourage them. The aim of this paper is to help fill this gap by presenting results from case study research of Canada-India firm collaboration4 in health biotechnology. Velho suggests that for international collaboration to have impact, the collaboration initiative has to be appropriately linked to innovation systems5 of both partners’ countries (Velho, 2002). In our study, we analyze Canada-India firm collaborations by considering how interactions between various innovation systems actors – for example, universities, research institutions, government agencies, financial institutions – in the two countries influence the partnerships. We examine the reasons for collaborations, the outcomes of collaborations thus far and the roles of the partners. We also consider whether systemic misalignments have been barriers to initiating and sustaining collaboration between Canadian and Indian firms. Our research on the characteristics of existing Canada-India health biotechnology firm collaborations and the factors that influence these partnerships can help inform policy options aimed at further encouraging collaborations in this area. We chose to study health biotechnology collaboration between Canada and India because the two countries have expressed interest in partnering with each other in such high technology fields (DFAIT, 2005). Also, they may have complementary assets that can encourage their collaboration. Researchers note that international technological collaboration may derive from the complementarities of knowledge and capabilities embedded in firms due to differences in their national contexts (Bartholomew, 1997). Canada is one of the leading countries in the health biotechnology field. As of 2003, Canadian health biotechnology firms had more than 10,000 products and processes in the development pipeline and the country consistently ranks high in terms of the number of scientific papers published in this field (van Beuzekom et al, 2006; Thorsteinsdóttir et al., 2006). Although Canada is knowledge-rich in this field, its commercialization record is weak. Only 10 firms account for 70% of the market capitalization of all Canadian biotechnology firms (Ernst & Young, 2004). Despite Canada having a comparable number of firms, equivalent capital investment, similar number of patents and greater number of products in the approval pipeline than the UK, its European peer makes double the amount of revenues (van Beuzekom et al, 2006; Raoub, 2005). Also, the majority of Canadian health biotechnology firms are small and have to rely on foreign partners to help them take their most promising projects forward (Niosi, 2003). In face of these challenges, analysts suggest that looking to global partners and global markets, including large, emerging economies such as India, may be an opportunity by which Canadian firms can sustain their innovation capacities and increase revenues (Dufour, 2002; Munn-Venn et al., 2005; Rao, 2008). In contrast to the scenario in Canada, India has a strong domestic pharmaceutical industry with capacity in generics and process innovation. Successful generics sales in India and abroad have enabled Indian pharmaceutical firms to grow rapidly and some of these firms are looking to compete with western multinationals (Chataway et al., 2007). India’s accession to the World Trade Organization’s (WTO) agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) in 2005 has triggered Indian firms to improve their capacities in discovery research and some are venturing into health biotechnology as a growth strategy. However, India’s product pipeline when considering novel health biotechnology products is still very young and India has yet to develop a new to the world innovation in this field. To fulfill their global aspirations, Indian firms may benefit from alliances with knowledgeable partners, such as Canada, to enhance their expertise in the health biotechnology field. Thus, the strengths and weaknesses of the Canadian and Indian health biotechnology private sectors may position them well for mutually beneficial collaboration. Both the Canadian and Indian governments have taken steps to forge stronger bilateral cooperation in science and technology (S&T) fields (DFAIT, 2005; ISTPCanada), but they are still looking for ways by which to strengthen their ties. In our study, we analyze existing Canada- India health biotechnology firm collaborations to learn from their experiences and to elicit information regarding their potential, thus gaining a greater understanding on how to further promote successful collaborations.