ABSTRACT
Large pharmaceutical companies from developed economies dominate the development of new drugs in the world. Most pharmaceutical firms in developing economies focus on the development of generic drugs. However, they gradually recognize that the profits they obtain are much lower than those earned by firms developing and selling new drugs. Therefore, some of them have tried to transform themselves by focusing on the development of new drugs. However, a gap of capabilities between firms mainly focused on generic drug development and firms developing new drugs can be expected. This means that the former would experience resource constraints and need to inculcate new capabilities to develop new drugs. Consequently, this research aims to investigate the transformation process of local generic pharmaceutical firms from the perspective of dynamic capabilities. Two small pharmaceutical companies in Taiwan were selected for in-depth case studies. The preliminary conclusions are given as follows: (1) small local generic pharmaceutical firms would prefer to establish a new subsidiary company for developing new drugs; (2) the firms would evaluate their key resources and capabilities prior to the transformation and adopt a focused strategy in order to enter the new drug market; (3) while the core resources of the firms prior to the transformation are mainly production-related equipment, the critical resources of newly transformed companies would be intangible assets; (4) prior to the transformation, the firms would leverage some of their original customers to build international collaborative capabilities, which in turn become part of their new capabilities for developing new drugs; and (5) the newly transformed firms would emphasize the capabilities of knowledge management and organizational coordination and integration. The research leads to several implications for academics.
