Global intellectual monopolies. Illustrative cases

Technological cooperation and competition among big pharmaceuticals

Introduction

The main contribution of this chapter is to show how intellectual monopoly’s innovation networks are alternatively in technological cooperation or technological competition with each other. This is illustrated by studying the pharmaceutical industry, focusing on big pharmaceuticals selling patented prescription drugs, vaccines, and treatments. We also show that big pharmaceuticals predate from their innovation networks, turning into intangible assets knowledge that was at least partly created by other participating organizations, particularly universities. The chapter presents a two-step model for the inception of intellectual monopolies and mobilizes it to study Roche, Novartis and Pfizer’s innovation networks.

Intellectual monopolies modularize knowledge production, distinguishing between competing steps of their innovation processes and steps where they collaborate for technology. For instance, generic modules can be co-produced between several intellectual monopolies and then integrated and combined with other equally generic or more specific modules from each of these leaders’ different innovation circuits.

Concerning technological competition, as it was explained in Chapter 2, intellectual monopolies rely on their internal Research & Development (R&D) capabilities as well as on innovation outsourcing to reinforce their knowledge monopoly. In the case of pharmaceutical intellectual monopolies, universities and their hospitals, together with small R&D laboratories and public agencies, participate in this process, and this chapter argues that they do so in a subordinated way. These subordinate organizations can be conceived as subordinate research universities (see Chapter 5) and innovating companies (see Chapter 2) because they participate in innovation networks but without garnering significant associated intellectual rents, which are mostly appropriated by the intellectual monopoly.

The pharmaceutical industry is paradigmatic for studying technological cooperation and competition dynamics between intellectual monopolies. Big pharmaceuticals outsource most of the innovation processes as an answer to the recent exhaustion of the blockbuster model (Collier, 2011; Khanna, 2012; Lazonick et ah, 2017). Moreover, since the 1990s, even if the biotechnology revolution resulted in more firms, its core concentration ratio increased. This core has an autonomous capacity to steer the industry, organizing from discovery to the distribution of new drugs (Baranes, 2016).

In this chapter, we focus on Roche, Novartis and Pfizer. Two outputs are considered in order to proxy their innovation networks: scientific publications and patents. Indeed, not every scientific publication leads to innovations, and probably most will not. Nevertheless, corporations get involved in scientific research when it contributes to their innovation goals. Hence, we argue here as well as in other chapters that the networks of most frequent scientific publications’ co-authoring institutions provide information about intellectual monopolies’ institutionalized innovation networks. By comparing these networks with those of patent co-ownership, we can infer dynamics within innovation networks in terms of who contributes and who assetizes successful results. This analysis is complemented by studying the funding sources of chosen big pharmaceuticals’ scientific publications.

Anticipating our findings, each co-publication network map depicts a cluster of big pharmaceuticals, thus providing evidence of the strong engagement of these corporations in technological cooperation. Simultaneously, we find multiple clusters where they mostly outsource innovation modules to universities, and in fewer cases to hospitals and small R&D laboratories. These could be described as clusters that are in a technological competition with those organized by other big pharmaceuticals researching the same topics.

By comparing co-publications and co-patenting networks, we show that big pharmaceuticals outsource stages of their innovation networks to subordinate institutions because, albeit they contribute to innovation processes, they do not co-own their patents. These results support the assumption of big pharmaceuticals as intellectual monopolies that excercise a predatory relationship with the participants of their innovation networks. Furthermore, we find that the US National Institutes of Health, as well as other core countries’ public funding agencies, are main supporters of big pharmaceuticals’ research, as declared in publications’ funding sources. This result goes beyond previous findings, such as Mazzucato (2015), that showed that big pharmaceuticals innovated using previous knowledge results that had been funded by the US public sector because we show that the public sector also directly finances these intellectual monopolies’ current R&D.2

All in all, this chapter provides evidence on how big pharmaceuticals compete and cooperate for technology to reinforce their intellectual monopolies, which are significantly based on public funding. Next, we further elaborate on the intellectual monopoly capitalism framework developed in the previous section of this book, focusing on technological cooperation and competition between intellectual monopolies. Section 3 presents our methodology, and findings are introduced and discussed in Section 4. Section 5 concludes.

 
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