Business development
By focusing on innovations in product or process technology, firms can gain competitive advantages and influence industry rivalry to their advantage. Patents are affecting the competition among rival firms by preventing competitors from gaining access to patented products and methods.
One way to illustrate industry competition is by focusing on the competitive forces which determine industry rivalry among competing firms. One such model pioneered by Professor Michael E. Porter of Harvard Business School is illustrated herein below.
Patents are particularly relevant when evaluating threats in the form of new entrants and substitutes. New entrants as well as substitutes can arise because of a development of new technologies.
Novel medicaments having greater efficacy or fewer undesirable side-effects will continue to drive industry competition in the pharmaceutical industry. Different dosage regimens or methods for treatment of diseases by alternative and more convenient routes of administration also influence industry rivalry.
Accordingly, firms can influence rivalry and continue to gain competitive advantages by focusing on a sustained product development - thereby new products and services which will be regarded by competitors as new entrants or substitutions.
Supplier power can be influenced by a firm focusing e.g. on securing patent rights to certain starting compounds needed for manufacturing a patented product. Likewise, by seeking to draft patent claims directed to selected commercial uses of a patented product, a firm can generate brand recognition and in this way seek to influence buyer power.
In conclusion, patents are important for gaining and sustaining competitive advantages in industries in which a technological development plays a significant role in the rivalry among existing firms.
