Competitive strategies in the Australian biotechnology industry

Meivin, C. W. (1988) Competitive strategies in the Australian biotechnology industry The University of Queensland:

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Author Meivin, C. W.
Title of report Competitive strategies in the Australian biotechnology industry
Formatted title


Publication date 1988
Place of publication The University of Queensland
Total pages 147
Language eng
Subjects 1503 Business and Management
Formatted abstract
This paper examines the competitive strategies within the emerging Australian biotechnology industry. The paper explores the industry's competitive environment in order to identify the structural factors that determine industry attractiveness. It also examines the competitive strategies that firms in this industry have adopted to attain sustainable competitive advantage within this environment.

The main source of information for this paper was a survey of 111 firms and individuals identified as having an involvement in the Australian Biotechnology industry. The survey instrument asked respondents to rate a number of variables which influence the firm's competitive environment and questioned respondents about their business unit strategies. The focus was primarily on financing, R&D, production and marketing strategies.

Structurally the industry is intensely competitive. The competition is global and most biotechnology companies believe that their main competition comes from other biotechnology companies. Entry barriers are initially low for small start-up R&D ventures but access to finance, the absence of scale economies and access to overseas distribution channels create mobility barriers within the industry. Buyer bargaining power (especially the multinational pharmaceutical companies) is strong and enhanced by their access to distribution channels. On the other hand the bargaining power of suppliers is decreasing as the industry evolves. The main threat from substitute products comes from products currently produced by existing processes. There are indications that this threat will diminish as the current processes are replaced by the more cost-efficient processes using the new technology.

The primary competitive methods that firms use in this industry to attain competitive advantage are new product development, quality control, experienced and trained personnel and reputation within the industry. The findings suggest that the strengths of most firms matched these strategic dimensions. Small firms stress the importance of research expertise, key people and regulatory compliance for new product development. In an apparent shift to a marketing orientation the larger companies rank size and growth of the market segment, market share and market positioning as important strengths.

Most firms in the industry seem to be concentrating on one technology and a small number of products and developing specific market niches with these products. The findings suggest that the performance of such firms exceeds the performance of those firms who appear to be "stuck in the middle".

The functional strategies used by biotechnology are diverse but attempt to address the high degree of segmentation in the industry, the need for access to R&D, scale-up facilities, product quality, pricing, and the need for access to international distribution channels. A number of these areas have been addressed using strategic alliances and a degree of vertical integration.


Document type: Research Report
Collection: MBA reports
 
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Created: Thu, 16 Dec 2010, 13:39:42 EST by Ning Jing on behalf of The University of Queensland Library