Sourcing Life Sciences Innovation from Australia and New Zealand: The Perspective of Western Multinational Companies

Abstract

Globalisation of life sciences is largely driven by Western multinationals. The market for life sciences R&D is geographically dispersed, causing multinationals to source new knowledge, ideas, and technology beyond their current geographic footprint. Governments around the world have realised the role of multinational companies in fostering national life sciences industries. Measures have been taken to develop robust scientific and human capital, strategic innovation policies, and supportive research and development infrastructure aimed at attracting multinational investment. Australia and New Zealand have emerged as potential sources of life sciences innovation, driven by the region’s renowned excellence in science and research. However, the ability to attract multinational investment is weaker than several other small advanced economies. This study sought to identify the determinants perceived by multinational companies that affect sourcing life sciences innovation from non-­‐proximate regions, namely Australia and New Zealand. Based on the theories of absorptive capacity and dimensions of proximity, this study identified internal and external determinants for sourcing innovation from a non-­‐proximate source. Sourcing is a nuanced process. Multinationals expend a substantial amount of time searching and identifying potential opportunities globally, which then pass through a complex internal bureaucratic system of decision-­‐making. The internal selling process and internal champion are critical internal determinants that influence the organisational culture, strategy, and propensity towards sourcing dissonant external innovation. External determinants included insufficiencies in geographic, cognitive, and institutional proximity. Despite the robust scientific competencies, the lack of commercially trained researchers and scientists leading commercial development, subsequent over-­‐ perception of the readiness and value of discovery innovation, bottleneck of early stage funding, and insufficient incentives for entrepreneurship in life sciences was found to be key elements of the existing innovation system that constrained the availability of commercial scientific outputs. Developing an entrepreneurial environment within the life sciences industry was recommended as critical to contribute to transitioning Australia and New Zealand from a “nice to have” to “cannot leave out” region for sourcing innovation. There is a need to address the apparent lack of self-­‐ awareness in the industry relative to the global market by assessing where regional competencies can be of value in the global market.