Skip to main content
  • Get access
    Check if you have access via personal or institutional login
  • Cited by 13
  • Cited by
    This chapter has been cited by the following publications. This list is generated based on data provided by CrossRef.

    Moyle, Brent D. Moyle, Char-lee J. and Bec, Alexandra 2018. The coexistence of tourism and mining: a strategic framework for cross-sectoral interaction. Current Issues in Tourism, Vol. 21, Issue. 17, p. 1966.

    Feldman, Maryann P. Halbinger, Maria Reichstein, Toke Valentin, Finn and Yoon, Ji Woong 2018. Technological achievements in entrepreneurial firms – legacy, value chain experience, and division of innovation labour. Industry and Innovation, p. 1.

    Stezano, Federico 2018. Industrial and Innovation Policies in the Mexican Biotechnology Sector. Journal of Industry, Competition and Trade,

    Isaksen, Arne 2016. Cluster emergence: combining pre-existing conditions and triggering factors. Entrepreneurship & Regional Development, Vol. 28, Issue. 9-10, p. 704.

    Carayannis, Elias G. and Campbell, David F. J. 2012. Mode 3 Knowledge Production in Quadruple Helix Innovation Systems. p. 1.

    Bianchi, Mattia Boscherini, Lorenzo Chiaroni, Davide Frattini, Federico and Chiesa, Vittorio 2012. Pharmacoinformatics and Drug Discovery Technologies. p. 72.

    Carayannis, Elias G. and Campbell, David F. J. 2011. Open Innovation Diplomacy and a 21st Century Fractal Research, Education and Innovation (FREIE) Ecosystem: Building on the Quadruple and Quintuple Helix Innovation Concepts and the “Mode 3” Knowledge Production System. Journal of the Knowledge Economy, Vol. 2, Issue. 3, p. 327.

    Adams, Pamela Brusoni, Stefano and Malerba, Franco 2011. Knowledge, supply and demand in industrial development: a sectoral systems perspective. Innovation and Development, Vol. 1, Issue. 2, p. 167.

    Tijssen, Robert J.W. 2009. Internationalisation of pharmaceutical R&D: how globalised are Europe's largest multinational companies?. Technology Analysis & Strategic Management, Vol. 21, Issue. 7, p. 859.

    Chang, Yuan-Chieh 2009. Systems of Innovation, Spatial Knowledge Links and the Firm's Innovation Performance: Towards a National–Global Complementarity View. Regional Studies, Vol. 43, Issue. 9, p. 1199.

    Fai, Felicia M. and Morgan, Eleanor J. 2007. Innovation, competition and regulatory change: Assessing interrelationships at the industry level. Management International Review, Vol. 47, Issue. 5, p. 767.

    Lane, Christel and Probert, Jocelyn 2007. The External Sourcing of Technological Knowledge by US Pharmaceutical Companies: Strategic Goals and Inter‐organizational Relationships. Industry & Innovation, Vol. 14, Issue. 1, p. 5.

    McKelvey, Maureen 2004. Evolutionary Economics Perspectives on the Regional—National—International Dimensions of Biotechnology Innovations. Environment and Planning C: Government and Policy, Vol. 22, Issue. 2, p. 179.

  • Print publication year: 2004
  • Online publication date: September 2009

3 - Pharmaceuticals analyzed through the lens of a sectoral innovation system



This chapter analyzes the pharmaceutical industry through the lens of a sectoral system of innovation. Intuitively, the pharmaceutical industry quite naturally lends itself to be analyzed as an SSI or as a network (see Galambos and Sewell, 1995; Chandler, 1990; Gambardella, Orsenigo and Pammolli, 2000; and McKelvey and Orsenigo, 2002). However, at the same time and precisely given the intuitive appeal of the notion of “system” and/or “network” for this industry, taking this approach forces the researcher to try to make this notion more precise and compelling and – above all – to clarify why and in what sense a “sectoral innovation system” approach is useful. This constitutes the general aim of this chapter.

Generically, the pharmaceutical industry can easily be considered as a system or a network because innovative activities involve, directly or indirectly, a large variety of actors, including: (different types of) firms; other research organizations, such as universities and other research centers; financial institutions; regulatory authorities; and consumers.

An innovation system or network is composed of actors, relationships among actors and other contextual features that affect the decisions of actors' behavior and the development of knowledge and economic competencies (Edquist and McKelvey, 2000). All the actors mentioned above are part of an SSI, and they are different in many senses. They know different things; they have different rules of action; they have different incentives and motivations, which may often conflict.

Recommend this book

Email your librarian or administrator to recommend adding this book to your organisation's collection.

Sectoral Systems of Innovation
  • Online ISBN: 9780511493270
  • Book DOI:
Please enter your name
Please enter a valid email address
Who would you like to send this to *
Arora, A., and , A. Gambardella (1994), The changing technology of technical change: general and abstract knowledge and the division of innovative labor, Research Policy, 23, 5, 523–532
Arora A., A. Gambardella, F. Pammolli and M. Riccaboni (2000), Advantage Lost? On the Leveling Effect of the Market for Technology in Biopharmaceuticals, paper prepared for the International Conference on Technology Policy and Innovation, Paris
Arrow, K. J. (1962), Economic welfare and the allocation of resources for investment, in R. R. Nelson (ed.), The Rate and Direction of Inventive Activities: Economic and Social Factors Princeton University Press, Princeton, NJ, 609–625
Arrow, K. J. (1983), Innovation in large and small firms, in J. Ronen (ed.), Entrepreneurship, Lexington Books, Lexington, MA, 15–28
Ben-David, J. (1977), Centers of Learning: Britain, France, Germany and the United States, McGraw-Hill, New York
Braun, D. (1994), Structure and Dynamics of Health Research and Public Funding: An International Institutional Comparison, Kluwer Academic, Amsterdam
Burstall, S. (1985), The Community Pharmaceutical Industry, European Commission, Brussels
Casper, S., and H. E. Kettler (2000), The Road to Sustainability in the UK and German Biotechnology Industries, paper prepared for ESSY conference, Berlin, June 1–3
Chandler, A. D. (1990), Scale and Scope: The Dynamics of Modern Capitalism, Belknap Press of Harvard University Press, Cambridge, MA
Chien, R. I. (1979), Issues in Pharmaceutical Economics, Lexington Books, Lexington, MA
Cockburn, I., and , R. Henderson (1996), Public-private interaction in pharmaceutical research, Proceedings of the National Academy of Sciences, 93, 23, 12,725–12,730
Cockburn, I., , R. Henderson and , S. Stern (2000), Untangling the origins of competitive advantage, Strategic Management Journal, 21, 10–11, 1,123–1, 145
Comanor, W. S. (1986), The political economy of the pharmaceutical industry, Journal of Economic Literature, 24, 1,178–1,217
Dasgupta, P., and , P. A. David (1994), The new economics of science, Research Policy, 23, 5, 487–521
David, P. A., , D. C. Mowery and , W. E. Steinmueller (1992), Analyzing the economic payoffs from basic research, Economics of Innovation and New Technology, 2, 73–90
Edquist, C., and M. McKelvey (eds.) (2000), Systems of Innovation: Growth, Competitiveness and Employment, Reference Collection (two volumes), Edward Elgar Publishing, Cheltenham
Eisenberg, R. (1996), Public research and private development: patents and technology transfer in government-sponsored research, Virginia Law Review, 82, 1,663–1,727
Galambos, L., and J. E. Sewell (1995), Networks of Innovation: Vaccine Development at Merck, Sharp & Dohme, and Mulford, 1895–1995, Cambridge University Press, New York
Galambos, L., and , J. L. Sturchio (1998), Pharmaceutical firms and the transition to biotechnology: a study in strategic innovation, Business History Review, 72, 250–278
Gambardella, A. (1995), Science and Innovation – The US Pharmaceutical Industry during the 1980s, Cambridge University Press, Cambridge
Gambardella, A., L. Orsenigo and F. Pammolli (2000), Global Competitiveness in Pharmaceuticals: A European Perspective, report prepared for the Directorate- General Enterprise of the European Commission
Gittelman, M. (2000), Scientists and Networks: A Comparative Study of Cooperation in the French and American Biotechnology Industry, Ph.D. thesis, Wharton School, University of Pennsylvania
Grabowski, H. G., and J. M. Vernon (1983), The Regulation of Pharmaceuticals, American Enterprise Institute for Public Policy Research, Washington, DC, and London
Grabowski, H. G., and , J. M. Vernon (1994), Innovation and structural change in pharmaceuticals and biotechnology, Industrial and Corporate Change, 3, 2, 435–449
Granovetter, M. (1973), The strength of weak ties, American Journal of Sociology, 78, 6, 1,360–1,380
Henderson, R., and , I. Cockburn (1996), Scale, scope and spillovers: the determinants of research productivity in drug discovery, RAND Journal of Economics, 27, 1, 32–59
Henderson, R., L. Orsenigo and G. P. Pisano (1999), The pharmaceutical industry and the revolution in molecular biology: interactions among scientific, institutional and organizational change, in D. C. Mowery and R. R. Nelson (eds.), Sources of Industrial Leadership: Studies of Seven Industries, Cambridge University Press, Cambridge, 267–311
Jacobzone, S. (2000), Pharmaceutical Policies in OECD Countries: Reconciling Social and Industrial Goals, Occasional Paper no. 40, Labour Market and Social Policy Series, Organisation for Economic Co-operation and Development, Paris
Kenney, M. (1986), Biotechnology: The Industry-University Complex, Cornell University Press, Ithaca, NY
Kogut, B., W. Shan and G. Walker (1992), The make or cooperate decision in the context of an industry network, in N. Nohria and R. G. Eccles (eds.), Networks and Organizations, Harvard Business School Press, Cambridge, MA, 348–365
Lacetera, N. and L. Orsenigo (2001), Political and Technological Regimes in the Evolution of the Pharmaceutical Industry in the USA and in Europe, paper prepared for the Conference on Evolutionary Economics, Johns Hopkins University, Baltimore, March 30–31
Levin, R. C., Klevorick, A. K., Nelson, R. R. and Winter, S. G. (1987), Appropriating the returns from industrial research and development, Brookings Papers on Economic Activity, 3, 783–831
McKelvey, M. (1996), Evolutionary Innovation: The Business of Biotechnology, Oxford University Press, Oxford
McKelvey, M. (1997a), Coevolution in commercial genetic engineering, Industrial and Corporate Change, 6, 3, 503–532
McKelvey, M. (1997b), Using evolutionary theory to define systems of innovation, in C. Edquist (ed.) (1997), Systems of Innovation: Technologies, Institutions and Organisations, Frances Pinter, London, 200–222
McKelvey, M., and L. Orsenigo (2002), European pharmaceuticals as a sectoral innovation system: performance and national selection environments, submitted for review to Journal of Evolutionary Economics
Matraves, C. (1999), Market structure, R&D, and advertising in the pharmaceutical industry, Journal of Industrial Economics, 48, 2, 169–194
Maxwell, R. A., and S. B. Eckhardt (1990), Drug Discovery: A Casebook and Analysis, Humana Press, Clifton, NJ
Mazzoleni, R., and Nelson, R. R. (1998a), The benefits and costs of strong patent protection: a contribution to the current debate, Research Policy, 27, 3, 273–284
Mazzoleni, R., and Nelson, R. R. (1998b), Economic theories about the benefits and costs of patents, Journal of Economic Issues, 32, 1,031–1,052
Merges, R., and Nelson, R. R. (1994), On limiting or encouraging rivalry in technical progress: the effect of patent scope decisions, Journal of Economic Behavior and Organization, 25, 1–24
Merton, D. (1973), The Sociology of Science: Theoretical and Empirical Investigation, University of Chicago Press, Chicago
Mossialos, E. (1997), Citizens' view on health systems in the 15 member states of the European Union, Health Economics, 6, 109–116
Mowery, D. C. (1998), The changing structure of the US national innovation system: implications for international conflict and cooperation in R&D policy, Research Policy, 27, 6, 639–654
Mowery, D. C., and N. Rosenberg (2000), Paths of Innovation: Technological Change in 20th Century America, Cambridge University Press, New York
Nelson, R. R. (1959), The simple economics of basic scientific research, Journal of Political Economy, 67, 297–306
Nelson, R. R., and Rosenberg, N. (1994), American universities and technical advance in industry, Research Policy, 23, 3, 323–348
Nelson, R. R., and B. N. Sampat (2000), Making sense of institutions as a factor shaping economic performance, Journal of Economic Behavior and Organization, forthcoming
Orsenigo, L. (1989), The Emergence of Biotechnology, Frances Pinter, London
Orsenigo, L., Pammolli, F. and Riccaboni, M. (2001), Technological change and network dynamics, Research Policy, 30, 5, 485–508
Office of Technology Assessment (1984), Commercial Biotechnology: An International Analysis, US Government Printing Office, Washington, DC
Pammolli, F. (1997), Innovation and Industry Structure: The International Pharmaceutical Industry During the Nineties, Guerini, Milan
Peltzman, S. (1974), Regulation of Pharmaceutical Innovation: The 1962 Amendments, American Enterprise Institute for Public Policy Research, Washington, DC
Pisano, G. (1991), The governance of innovation: vertical integration and collaborative arrangements in the biotechnology industry, Research Policy, 20, 2, 237–249
Pisano, G. (1997), R&D Performance, Collaborative Arrangements and the Market for Know-how: A Test of the “Lemons” Hypothesis in Biotechnology, working paper, Harvard Business School
Powell, W. W., Doput, K. W. and , L. Smith-Doerr (1996), Interorganizational collaboration and the locus of innovation: networks of learning in biotechnology, Administrative Science Quarterly, 41, 116–145
Schwartzman, D. (1976), Innovation in the Pharmaceutical Industry, Johns Hopkins University Press, Baltimore
Sutton, J. (1998), Technology and Market Structure: Theory and History, MIT Press, Cambridge, MA
Teece, D. J. (1986), Profiting from technological innovation: implications for integration, collaboration, licensing and public policy, Research Policy, 15, 6, 185–219
Thomas, L. G. (1994), Implicit industrial policy: the triumph of Britain and the failure of France in global pharmaceuticals, Industrial and Corporate Change, 3, 2, 451–489
Ward, M., and Dranove, D. (1995), The vertical chain of R&D in the pharmaceutical industry, Economic Inquiry, 33, 1–18
Zucker, L., M. Darby and M. Brewer (1997), Intellectual Human Capital and the Birth of U.S. Biotechnology Enterprises, Working Paper no. 4,653, National Bureau of Economic Research, Boston