Business-to-Business Relationships in the Biotech-Sector

Essay from the year 2002 in the subject Business economics - Business Management, Corporate Governance, grade: 1,3 (A), University of Tampere (School of Business Administration), course: Strategic Business Relationships and Networks, language: English, abstract: Relationships in the Business-to-Business sector can be viewed as simply dyadic relationships or as a cluster of relationships imbedded in a network. Relationships are valuable resources, which, although they do not appear on the balance sheet, provide considerable returns on the investment of time and money devoted to their development. Therefore, relationships can also be the source of value creation for the firm, its shareholders, employees, customers, partners and suppliers. The nature or the atmosphere of the relationship is important for value creation .Relationship strength as assessed by relational norms such as flexibility, communication and solidarity has been shown to be an important factor in determining the effectiveness of Business-to-Business relationships. According to the Boston Consulting Group (2001), approximately 40 biotech-clusters, in different developmental stages, have emerged worldwide. Clusters can be defined as 'thematically focused collections of scientific institutes and companies of different size on a limited space with high attractiveness to third parties'. In addition, the convergence of modern biotechnology with information and communication technology and the application of robotics and automation techniques catalyze these developments even more. The cluster speeds up the company's capability to innovate. This rapid growth of knowledge and the dispersion of expertise open up new business. The highly specific knowledge and skills fosters the formation of yet more specialized companies and value creation. In this essay, I would like to illustrate two types of partnerships within clusters of emerging biotechnology companies. Firstly, relationships between emerging biotech companies and their most important non-financial business partner. Secondly, relationships between emerging biotech companies and their lead investor, which I would like to describe by using Venture Capital investments. My purpose was to evaluate the strength of the relationship in the two types of partnerships in general, and afterwards with the help of an example of a biotech company, called MorphoSys, located in my home country, Germany.