EXTERNAL KNOWLEDGE, ABSORPTIVE CAPACITY AND PHARMACEUTICAL INNOVATION IN NIGERIA

Abstract

The global pharmaceutical industry is a multibillion dollar, knowledge-driven sub-sector; where firms‟ innovation and competitiveness depend greatly on external knowledge. The firm‟s ability to recognize, acquire and utilize external knowledge for commercial ends depends on its absorptive capacity. Information on the capability of Nigerian pharmaceutical firms to identify, assimilate and exploit external knowledge is scarce. This study therefore examined the external knowledge sources, absorptive capacity and innovation in Nigeria‟s pharmaceutical industry. A purposive sampling of key players comprising MD/CEOs and Chairman/Captains of industry in 5 out of 8 listed pharmaceutical firms and 3 out of 6 industry associations was conducted in 2013. Information was elicited using questionnaires and semi –structured interview guide. The study found that pharmaceutical firms in Nigeria invested 0.2 to 15 % of their annual sales on R&D. The external knowledge sources for the industry were basically through seminars/conferences, internet, customers and suppliers of input. Others included journal publications, technical reports, training/skill acquisition, workshops and the Pharmaceutical Group meetings. Qualitative assessment of the absorptive capacity of firms in the subsector revealed a medium-to-high level rating. The major determinants of absorptive capacity of the firms included experience, informal interactions, training and educational qualification of staff. Pharmaceutical innovation was majorly in the area of new product and new process developments of generic drugs. No new drug moiety development was recorded in the subsector. The major technology acquisition strategies utilized for new product and process development were in-house R&D, tapping tacit knowledge of staff, and sourcing knowledge from other firms in the industry. Strategic partnership was deployed by foreign-owned and multinational firms as knowledge acquisition strategies for drug discovery and delivery.