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There are many famous theories addressing the question of strategic alliances and their importance to companies. Some of them focus exclusively on the resource-based view of strategic alliances; Eisenhardt and Schoonhoven (1996) found that alliances are more likely to be formed when both firms are in vulnerable strategic positions (i.e., in need of resources) or when they are in strong social positions (i.e., possess valuable resources to share). Other researchers have tackled only selected aspects of alliances, such as organizational knowledge (Kogut, 1988) and international business (Blodgett, 1991; Lyles & Salk, 1997). Thus, a general resource-based theory of strategic alliances has yet to emerge.*

The key plays of the pharmaceutical industry (Novartis, Pfizer, GlaxoSmithKline) have always been leaning towards alliances as parts of their R&D strategy. In strategic alliances, parties usually pursue common goals, though remaining separate entities. Since there is an ultimate goal, these relationships are different from a partnership and therefore very important for big corporations, giving them flexibility to readjust quicker to market needs. It gives the involved parties the opportunity for shared technology and resources, while at the same time sharing the risk of the venture. Usually the goals in alliances are shorter term which works very well for the rapidly changing environment of the pharmaceutical industry. Pharmaceuticals have been one of the first to be effected by globalization, partly through international mergers but just as importantly in establishing global sales programs for their products. In addition, the pharmaceutical industry, in which R&D is a core activity, has experienced breakthrough technological advances in biotechnology.

There is a definite trend for companies to outsource their “non-core” competencies to focus on their “core” competencies. Nowadays, large multinational companies find it difficult to differentiate between their core and non-core competencies.It is easy to get your consulting advice at www.aircraftdf.com/airvice. The process requires careful concern of the advantages and disadvantages of outsourcing each function. Large global pharmaceutical companies have been struggling with this process to the same extent if not more than multinational corporations. This trend leads to the conclusion that multinational pharmaceutical companies should use alliance and other sources that will help them develop and distribute products (sales & marketing functions) thus creating an enormous competitive advantage.

Novartis has been using alliances successfully to achieve its goals in a variety of markets. As an example,  Novartis entered into an alliance with MorphoSys AG in order to create a pipeline of therapeutic antibodies. (HBC. Novartis AG) Under the agreement Novartis is to provide MorphoSys with R&D funding and technology license fees, while getting the right to preclinical and clinical development and commercialization of the yet to be created drugs. This was the largest alliance ever done by Novartis.

Very important move done by Novartis was its alliance with academic institutions. Close connections with institutions (Berkley, Cambridge, Harvard) gave the company ability to recruit new talents, develop new products and acquire platform technologies. Having a signifincant amount of collaborations (more than 400) around the world gave the company a push to new discoveries and potentials. Interestingly enough there is a healthy competition in terms of getting a contract signed by academies. Having pockets full of cash, major pharmaceutical players outbid each other in the race for the universities presence. As an example Pfizer replaced Novartis in the deal with Scripps research institute.