Introduction

The last 25 years have seen a revolution in the biological sciences that has had several dramatic effects on the global pharmaceutical industry. These effects raise a number of fascinating questions about patterns of industrial evolution and about the interaction of scientific, organizational, and institutional changes. Although a cursory analysis might suggest that the revolution in molecular biology can be interpreted simply as a classic “Schumpeterian” event, in which the early days of the industry were characterized by high rates of entry and incumbents were gradually supplanted by a new breed of innovators, it has several features that make it quite distinctive from the “traditional” model.

First, whereas the traditional model is derived largely from the study of radical shifts in engineering knowledge (Abernathy and Utterback, 1978; Tushman and Anderson, 1986), the revolution in molecular biology represented a shift in the scientific knowledge base of an industry. Second, despite the sweeping nature of the molecular revolution, incumbent pharmaceuticals companies have not been swept away by new entrants. Third, and relatedly, the relationships between incumbents and entrants has entailed not only competition, but also cooperation and the establishment of complex interactions between firms. Finally, and perhaps most importantly, the revolution did not create a monolithic new paradigm of technical development, but instead created two quite distinct trajectories of development that have only recently been combined: the use of biotechnology as a tool for the production of proteins whose therapeutic properties were already well understood, and the use of biotechnology as a tool in the search for entirely new therapies.