Business Model Design for Latecomers in Biopharmaceutical Industry: The Case of Korean Firms

Changhyeon Song and Kwangsoo Shin
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Changhyeon Song: Technology Management Economics and Policy Program, College of Engineering, Seoul National University, Gwanak-ro 1, Gwanak-gu, Seoul 08826, Korea
Kwangsoo Shin: Department of Biomedical Convergence, College of Medicine, Chungbuk National University, Chungdae-ro 1, Seowon-gu, Cheong-ju, Chungbuk 28644, Korea

Sustainability, 2019, vol. 11, issue 18, 1-15

Abstract: Given high business risks and interdependency with various organizations in biopharmaceutical industry, business model has become a key element for firms that aim to be more sustainable and profitable. Despite its growing importance, research on the business model design in biopharmaceutical industry is limited. In particular, there is a lack of research dealing with business models or strategies for latecomers. In the face of drastic changes such as market expansion and patent expiration, there has been growing interest in latecomer’s business model in the biopharmaceutical industry. This study identifies different types of business model designs using hierarchical clustering. Based on an empirical study of 313 biopharmaceutical firms in Korea, we find three types of business models: business diversified research firm, non-diversified research firm, and mature firm. We then compare the general characteristics and performances of each cluster. The findings indicate that business diversification of biopharmaceutical firms is beneficial in terms of profit. This implies that the biopharmaceutical firms in latecomer countries such as Korea are recommended to consider business diversification for sustainable management.

Keywords: business model; biopharmaceutical industry; latecomers; business sustainability; hierarchical clustering (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2019
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