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New Challenges in Alliance Portfolio Management

Chapter
Part of the International Series in Quantitative Marketing book series (ISQM, volume 20)

Abstract

In order to expand the pool of opportunity and access external R&D, many pharmaceutical firms have accumulated portfolios of alliances with other industry participants over the past decade. Academic research has amply demonstrated that such alliance portfolios can contribute to firm innovativeness and profitability. Yet, alliance portfolios don’t always pay off and much remains to be done to arrive at a theory of effective alliance portfolio management. This chapter pursues a number of contributions to this area. First, the author offers an overview of the key dimensions of portfolio management: scale, partners, governance, technology diversity, cost, and dynamics. Second, the author singles out the technological diversity of the alliance portfolio and elaborates on its definition and measurement. Third, the author addresses three challenges that relate to managing technologically diverse alliance portfolios in the pharmaceutical industry. The first challenge is theoretical in nature: the author contrasts two competing theoretical perspectives that raise different expectations with regard to optimal portfolio diversity, and he motivates why the real options perspective may prove to outperform the learning theory perspective. The second challenge stems from the observation that not all firms benefit equally from similar levels of alliance portfolio diversity: the author argues that such differences across firms can be explained by differences in the commitment of managerial resources to implementing a portfolio strategy and by differences in internal routines and capabilities. The third challenge relates to the changing nature of collaboration: the evolution of biotechnology as a scientific field, the emergence of nanotechnology, the increasing potential of personalized medicine, and particular institutional changes such as healthcare reforms have reshaped the pharmaceutical landscape and require novel approaches to alliance portfolio management.

Keywords

Real Option External Knowledge Portfolio Management Pharmaceutical Firm Technology Diversity 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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Copyright information

© Springer Science+Business Media New York 2014

Authors and Affiliations

  1. 1.Koç University & Tilburg UniversitySariyerTurkey

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