ABSTRACT
The fi rst step in directing the evolution of a fi rm is to select the sub-habitat or habitats that the fi rm wishes to occupy. In discussion of this point with many of the industry’s senior executives, two important issues emerge. The fi rst is the reluctance to choose a habitat and, therefore, potentially restrict market potential. The corporate level strategy of many of the pharmaceutical industry’s largest fi rms currently includes both research-based models (heading towards Genius) and generic (heading towards Monster Imitator). Yet there is reason to believe that these may be transitional forms that will eventually resolve into more pure play companies. In particular, members of the investment community who were interviewed for my earlier research pointed out such hybrid models would always suffer from a ‘conglomerate discount’. Essentially, investors believed that the same board could not extract maximum value from two or more very different businesses and that, in any case, it was the job of investors and analysts to allocate resources across a portfolio of businesses, not that of the board.
