Understanding the Differences in Strategic Alliance Formation in the Indian and Chinese Pharmaceutical Industry

By using data on Indian and Chinese pharmaceutical companies, before and after the domestic implementation of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs), this study seeks to understand the role of the institutional theory in the formation of strategic alliances. Four structural dimensions of strategic alliances formation are identified as economic distance, the number of alliance participants, cross-national and partner diversity across different alliance types- marketing, manufacturing, licensing, retail and wholesale services, R&D, health and medical services, and others. Some alliances from both countries are multi-type which are categorized as different variables. The trend analysis reveals that TRIPS does not appear to be impactful for either country which aligns with its staggered domestic implementation in both countries. Through an analysis involving the Fisher Exact test on a dataset of 307 strategic alliances, this study finds that China had a statistically significant greater number of alliances with heterogeneous partners, partners from different industries, manufacturing alliances, all single type alliances (alliances that had only one type of motivation), and all alliances as compared to India. Furthermore, India demonstrated a statistically significant preference for multipurpose alliances revealing a broader trend of China engaging in more single motivation alliances in comparison to India’s fewer multipurpose strategic alliances with respect to the pharmaceutical industry.