The Contractual Structure and Innovative Effects of Pharmaceutical-Biotechnology R&D Collaborations

The strategic alliances that larger pharmaceutical companies have formed with small research and development firms over the last two decades are examined.Recent studies that use data from pharmaceutical and biotechnology R&D collaborations are cited in order to analyze the effect of uncertainty (due to rapid technological advances) on contractual R&D agreements. Data sources include the ReCap database of biotechnology contractual agreements, and U.S. patents. The results of the studies indicate that firms engaged in work with newer technologies associated with higher uncertainty are likely to choose hierarchical contract structures over simpler arrangements.An analysis of the effect of R&D collaborations on the discovery of new drugs reveals that R&D alliances, particularly those signed in the early stages of research, play a distinct role in the patenting of new drugs by large pharmaceutical companies.(SAA)