Creative Destruction in Biotechnology

For all the talk of the numerous biotechnology companies with mere months of cash left and the predictions of looming liquidations, mergers, and acquisitions, it is important to note that a measure of destruction can benefit industry progress.

Economy Joseph Schumpeter coined a term for industrial progress through destruction: creative destruction. In this process, growth occurs by the development of new companies, which develop new innovations and replace older companies.

Even mergers and acquisitions can drive progress, as they free seasoned executives from their former jobs. The story of Hybritech’s key role in the development of the San Diego biotechnology cluster is a case study of this kind of growth:

Creative Destruction: Hybritech's role in building the San Diego Biotechnology Cluster

Creative Destruction: Hybritech's role in building the San Diego Biotechnology Cluster

Source: Building Biotechnology

So, while the process of creative destruction may be painful for those who are employees or investors in the destroyed companies, it is a natural element of business cycles, and an essential part of driving progress.

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  1. Damien Bove
      May 13, 2009

    its a known fact that when you speak to realy successful people and ask them to pinpoint the turning point its when a normaly disruptive event frees them of “invested effort” and enables them to undertake zero based thinking and take new directions.

  2. CMCguy
      May 13, 2009

    The Hybritech dispersion did spawn new companies and provide a knowledge base that penetrated SD biotech however how many successful products have resulted through these siblings/torch bearers connections? Although that can be a very poor measure in this field it probably can be traced to overly research academic type mind-set held by most Hybritechies that lacked fundamental knowledge and capability to transition to development stage projects. Certainly the (inevitable?) culture clash with Lilly was mismanaged but had faults on both sides which seems to have been repeated many times since in M&As (Roche-Genentech latest example). There needs to be the correct convergence of talents and diverse disciplines (plus timing/serendipity) to promote and execute on innovation that seems to be rare occurrence.