Creative Destruction, Bureaucratic Organization, or Evolutionary Recombination? An Exercise in Strategic Foresight Based on the History of the Bio-Pharmaceutical Industry

Abstract

Schumpeter had initially argued that the capitalist process is a process of the creative destruction of established industries by new combinations of resources and technologies by entrepreneurs. In contrast, observations of large scale projects in the second world war led him to argue that R&D will be increasingly organized in large bureaucratic units. However, today, the organization of pharmaceutical research in large units and the integration of new technologies is a problematic process. Pharmaceutical companies are under pressure from a seeming lack of innovative output and resultant financial constraints. Therefore one example of a case where the relevant processes of both positions of Schumpeter are at work is the competition between companies based on new and on established technologies in the bio-pharmaceutical realm. Based on a historically informed analysis of the bio-pharmaceutical industry in the domains of markets and regulation, strategy, research and development, and mergers and acquisition we discuss forces affecting the outcome between creative destruction and bureaucratic organization for the bio-pharmaceutical industry.