Supporting FEI through innovation strategy implementation

Annabeth Aagaard

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    Front end innovation (FEI) represents the first building blocks of product development, but is often regarded as a weak link in innovation literature. Various theorists emphasize that a firm’s innovation can benefit substantially by improving the front end of innovation process (Reinertsen, 1999, Steven & Burly, 2003, and Vernorn et al., 2008) and that innovation strategies play a central role in optimization of innovation (Clark & Wheelwright, 1995; Cottam et al., 2001; Morgan & Berthon, 2008).

    Cottam et al. (2001) stress that in order to maximize the benefits of previous innovations innovative activities must be given a strategic direction. An explicit innovation strategy is addressed as a success factor for several reasons. First, it provides a guideline for dealing with strategic issues, such as selecting the markets to enter and the skills to develop (Lester, 1998). Second, strategically planned projects enable the firm to take advantage of synergy between parallel innovation projects. Third, learning-by-doing can materialise, enabling the firm to reap benefits of previously successful innovations along with firm-specific skills that emanate from them (Rothwell, 1992).

    The pharmaceutical industry has experienced a worldwide decline in the number of applications for new molecular entities to regulatory agencies since 1997. The decrease in drugs being launched should be held against the fact that medical research and research costs have increased tremendously in the same period. Hence high pressures are put on pharmaceutical research and FEI to produce more valid candidates for drug development and faster. As drug development has become more risky and costly, (Schmid & Smith, 2005; Herson, 2005) the FEI, represented by the research and discovery departments of pharmaceutical companies, are increasingly being compelled to provide stronger drug candidates for efficient drug development and quick market launches. This challenges the organization and structures of pharmaceutical FEI emphasizing the need to support and enable the front end activities in a targeted manner. In an industry where a newly discovered therapeutic agent with blockbuster potential still faces more than a 90% change of failure during the development phase (Duyck, 2003), and knowing that the fully loaded cost for the development of the agent amount to about one billion dollars (Pacl et al., 2004) underlines that enhancing the ‘predictability’ of the discovery process/FEI ought to be an immediate priority area of investment for Pharma (Duyck, 2003).

    This paper explores how pharmaceutical front end innovation can be actively supported through the development and implementation of an innovation strategy. The empirical field of pharmaceutical innovation and the pharmaceutical industry were selected due to this industry’s unique characteristics with an R&D process lasting up to 10-12 years, which is highly controlled and regulated by external authorities, such as The American Food and Drug Administration (FDA) that requires comprehensive documentation, testing and screening of all drugs being developed and launched for the American market.

    The applied methodology is an in-depth action-oriented case study of an innovation strategy development and implementation process in a Scandinavian pharmaceutical company. Through a three-year Ph.D. study the process of identifying, developing and integrating a targeted innovation corporate strategy and divisional action plans is examined and effects and results are evaluated and measured. The findings and key learnings from the study are presented as propositions of how innovation strategies can be developed and integrated in ways that can affect FEI positively and in active support of the FEI process.

    Keywords: Front End Innovation, Innovation management, Innovation strategy, Pharmaceutical innovation, Action research

    Publikationsdato5. dec. 2011
    StatusUdgivet - 5. dec. 2011
    BegivenhedDansk Ledelsesakademi 2011 - København, Danmark
    Varighed: 5. dec. 20116. dec. 2011


    KonferenceDansk Ledelsesakademi 2011