Social and Intellectual Capital Formation in Leading Indian Pharmaceutical Companies

Abstract

A number of Indian pharmaceutical firms have achieved high levels of success globally in product and process development. They are competing effectively in the generic pharmaceutical markets of the USA and Europe. They have progressively accumulated process development and manufacturing capabilities which meet the stringent criteria of the US and European Union regulators, and have also acquired drug "discovery" skills to a level which has gained some recognition from major Western pharmaceutical companies. This paper analyses evidence from a range of documentary sources in order to elucidate how two of the leading Indian companies have accumulated the intellectual and social capital which has enabled this degree of innovative success. It finds evidence that environmental factors have opened up opportunities which drew on the firms' early capabilities, while requiring additional skills. In response, these firms have invested in expanding their initial internal competences through a number of routes, including hiring Indian-born, Western-trained scientists and industry executives, membership of an internationally oriented industry association, etc. As their profits and reputations have grown, they have also been able to access external knowledge through Western alliances and acquisitions. It concludes that they have built a broad business and technical knowledge-base and very wide networks, which have been effectively integrated thus far in pursuit of business objectives, but raises the question of whether they should now adopt a more focused approach.

Value creation through cross-border mergers and acquisitions by the Indian pharmaceutical firms

“…The successful presence of Indian pharmaceutical firms in highly regulated western markets (Baisiwala et al, 2003;Harris and Slater, 2003;Sahu et al, 2004) is leading to research on processes that are adding value to these firms that are expanding globally. Bower and Sulej (2006) have pointed out that Indian pharmaceutical firms have built wide global networks and have been able to access external knowledge through western alliances and acquisitions. The focus of our study on the acquisitions in the research intensive or high-technology pharmaceutical industry was also theory driven as such acquisitions involve the exchange of research-based resources that meet conditions of resource value through heterogeneity or imperfect mobility (Peteraf, 1993).…”

Cross-Border Acquisitions and Shareholders’ Wealth: The Case of the Indian Pharmaceutical Sector

“…In the rapidly changing drug discovery industry, the companies secure their future by expanding and redefining competencies in technology and competition (Amir-Aslani and Chanel 2016). Indian pharmaceutical firms can acquire external knowledge and the latest and contemporary knowledge from their alliances and acquisitions in western countries (Bower and Sulej 2006). Synergistic CBA create value through asset sharing, financial diversification, and reverse internalization (Seth et al 2002).…”