A Marriage of Large and Small: R & D for Healthcare Products

The most critical factor for success in the pharmaceutical industry is the discovery of novel drugs that treat major illnesses for which there had been, up to then, only inadequate kinds of treatment. Until a decade or so ago, most drugs were discovered through the in-house research of major pharmaceutical companies. But now these major companies are increasingly relying on small firms and academia for drug discovery, while concentrating on their core competences of drug development and marketing. A similar pattern is emerging in other parts of the healthcare industry. This article discusses the synergy between small and large firms in healthcare and suggests that this pattern may become a general one for all innovative industries.