Unlocking the true potential of Medicon Valley

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Unlocking the true potential of Medicon Valley

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Title: Unlocking the true potential of Medicon Valley
An analysis of the biotech cluster, the consequences for business model choice and cluster development
Author: Winther Larsen, Henrik Gyll; Beck, Tillmann
Abstract: In recent years, the Danish pharmaceutical biotech sector, in the Medicon Valley cluster, has struggled due to global challenges found in the industry. In this master thesis, we analyze the pharmaceutical biotech sector in Medicon Valley and assess its ability to sustain and increase international competitiveness. For our analysis, we apply Porter’s diamond framework to assess the cluster. The concept of business models and transactions costs will then be applied to discuss how companies could adjust to this cluster environment. Empirically, we rely on secondary data, collected from studies, databases and statistics. Further, we have conducted 17 in-depth interviews with key stakeholders that contribute to our understanding of current challenges facing the biotech industry in Medicon Valley. In our cluster analysis we identify four major drivers that determine the competitiveness of the industry. These drivers are qualified human resources, research strongholds, the availability of capital, and the presence of a support infrastructure. As a result of our analysis on these drivers, it is apparent that the region is comprised of research strongholds and large pharmaceuticals, providing biotech companies opportunities for both innovation and collaboration. Further, Medicon Valley has a high number of PhD graduates that can provide biotech companies with a pool of qualified researchers. However, the analysis also reveals that MV lacks capital resources and needs to attract more experienced management and international talent to supply biotech companies with more specialized skills and foster serial entrepreneurship. We then discuss how these identified drivers influence the business model choice of biotech companies. We find that a lean type of business model, which focuses on outsourcing, contracting and licensing instead of keeping most of the value chain integrated within the company, is more suitable in order to reach a competitive advantage. However, we argue that under a lean business model, it is essential to strengthen certain aspects within the cluster. First, the creation and maintenance of an ecosystem, providing the right framework conditions is important. In strengthening this ecosystem we discuss the need for improvements in the Tech Transfer Offices, public funding and R&D tax subsidies. Second, the ability to provide the right platform for network activity and social capital, both locally, as well as internationally can be improved. Overall, this master thesis contributes to a better understanding of specific drivers in MV, how companies should be structured and how the cluster should effectively evolve. Our findings serve as a starting point for a more in-depth analysis on specific drivers, a certain business model choice and a possible role of the cluster.
URI: http://hdl.handle.net/10417/3067
Date: 2012-04-25
Pages: 133 s.
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