Vital Factors behind the Strategic Alliances of the Biotech Companies in Taiwan

Biotechnology industry is well-known as a knowledge intensive industry and required relatively large financial support. As the demanding nature from both finance and knowledge/technology resources, biotech companies tend to strategically collaborate with others for product development and marketing. Therefore, a growing need of strategic alliance was observed in biopharmaceutical industry of Taiwan. However, the vital factors and underlying strategy were undiscovered in these particular early-staged companies. This study provides foundation of how the decision makers deployed institutional resources with strategic alliances. The study began with construction of factors for strategic alliance suitable for the biopharmaceutical companies in Taiwan. The questionnaire consisted of five constructs including motivations and background to initiate strategic alliances, the underlying rationale for joint ventures, the opinion derived from a manager for possible minority equity alliances, the past experience of strategic alliances, and the needs and inquiries of a future strategic alliance. Expert opinion from five professional personnel was adopted to validate the instrument as well as the results. A case series study was conducted to verify and to construct the model specific for this industry. Twenty out of 24 (83.33%) bio-pharmaceutical companies were successfully interviewed for further case series analysis and model construction in this study. There are three major findings derived from the research. First, stratified by the year of a company founded: companies founded before year 2000 were likely to take financial resource, marketing, and technology transfer as main strategies for alliances. Companies founded after year 2000 tended to adopt strategies by academic collaboration, resource sharing, market information exchange, and tackling investment barriers as their major reasons for alliances. Second, the objects of alliances: a growing need of alliance with foreign institutes was found in the past five years. Companies became cautious in strategic alliances to reflect the needs of their development. Third, the activity of alliances: Small companies tended to obtain new technology and financial resources from alliances. However, a large company with sufficient financial supports was likely to preserve their core competence by reducing chance of collaborating with others. The findings from this premature industry in Taiwan give clues for strategic development of small-scaled emerging market. All parties, including the government, the stake holders, the players, whoever interested in the development of this industry should pay much attention on the needs from different stage of development in terms of life-cycle of a company, an industry, and an economic entity.