1. ¹Joint Research Centre (JRC), Institute for Prospective Technological Studies (IPTS), European Commission, Sustainability in Agriculture, Food and Health Unit (SAFH), Edificio EXPO, C/Inca Garcilaso, s/n, E-41092, Sevilla, Spain, Tel: +34 95 448 83 64, Fax: +34 95 448 84 34, Email: Emma.GUTIERREZ-DE-MESA@cec.eu.int
2. ²Lecturer in Econometrics at the Universidad Complutense
3. ³Professor of Financial Economics at the University Complutense of Madrid (UCM)

Received 27 April 2006.

Abstract

The paper studies strategic alliances signed between traditional pharmaceutical companies (TPCs) and new biotechnology firms (NBFs) in Spain, on the initial basis that a firm's rate of new product development is a positive function of the number of strategic alliances that it has entered into. Nevertheless, we believe, as do others, that although strategic alliances may initially have positive effects on that rate, this relationship may exhibit diminishing returns. We suggest that the relationship between the number of alliances and the rate of new product development may be an inverted U-shape in the Spanish biopharmaceutical industry. Our regression model provides evidence to support such a relationship. However, the results suggest that only when the firm enters into too many alliances does diminishing return and ultimately negative return set in. The main strategic conclusion for the biopharmaceutical industry is that alliances represent a viable way for biopharmaceutical companies to gain access to the complementary assets required to increase their rate of new product development. A major contribution to this investigation is the empirical assessment for the Spanish biopharmaceutical industry.