Creating knowledge structures in the pharmaceutical industry: the increasing significance of virtual organisation.

This paper explores the specific trend and challenges facing the pharmaceutical industry regarding the exploitation of Internet e-commerce technology and virtual organisation to develop and maintain competitive advantage. There are two important facets of the current trend. One is the rapid development of a complex network of alliances between the established pharmaceutical companies and the specialised biotechnology company start-ups. The other is the rapid growth of internet e-commerce companies dedicated to developing specialised technological platforms for acquiring and selling genetic and biochemical knowledge. The underlying challenge is how big pharmaceutical companies can emulate some of the innovation processes of smaller biotechnology company start-ups, and how they can appropriate and applied new technological knowledge on the development of new drugs. Pharmaceutical companies in order to retain competitive advantage need to continuously monitor all aspects of knowledge management with regard to the R&D and manufacturing process (as well as customer management and marketing). Technological change and organisational restructuring should be aimed at boosting the capacity of large firms to innovate rapidly.