Why which strategy? How Path-Dependancy and external shocks shaped Pharma companies' strategies

Abstract: Since its creation in the late19th century, the pharma industry has seen numerous shifts in the leading companies underlying strategies. These shifts have been driven by internal and external shocks such as the 2008 financial crisis, scientific progress and, favorable demographic trends. The evolution of the pharma industry has led some scholars to argue that the industry and the companies active within it show signs of its development being a result of Path-Dependency and path-dependent processes. The paper's aim is, therefore, to through a deductive qualitative case study of two of the industry's leading pharma companies (AstraZeneca and Johnson & Johnson), a historical review of the industry, and interviews with industry experts to investigate if the strategic evolution within the industry has been affected by Path-Dependency and if it can be explained to be the result of path-dependent processes. Hence, the research question is: (1) If, and if yes, how has Path-Dependency affected the strategic positioning of the pharma industry leaders? (2) Can their current strategic positioning be explained to be the result of path-dependent processes? The paper concludes by analyzing its gathered empirical evidence, using the Path-Dependency theory and leading strategic frameworks, that the strategic positioning of the focus companies has been affected by Path-Dependency, and their strategic positioning can be explained as to be the result of path-dependent processes. A limitation of the study is the narrow-investigated focus group since the conclusion is only applicable to them even though they both are large and significant players within the industry. To draw a more comprehensive industry conclusion, more case studies need to be conducted. The paper further highlights that the phenomena of Path-Dependency could have been, to a more significant extent, prevailing in the industry prior to the new millennium. It might not be as prevalent in the 21st century due to the rapidly changing nature of the industry in recent years. To test this interesting observation, further research should be conducted to enlarge the understanding of this industry and how it might develop in the future.