Analysing industry convergence in probiotics
Sabine Bornkessel*
University of Applied Sciences, Oldenburger Landstr. 24, 49090 Osnabrück,
Germany. E-mail: s.bornkessel@hs-osnabrueck.de
Stefanie Bröring
University of Applied Sciences, Oldenburger Landstr. 24, 49090 Osnabrück,
Germany. E-mail: s.broering@hs-osnabrueck.de
Wageningen University, P.O. Box 8130, 6700 EW Wageningen, The
Netherlands. E-mail: s.broring@wur.nl
Onno S.W.F. Omta
Wageningen University, P.O. Box 8130, 6700 EW Wageningen, The
Netherlands. E-mail: onno.omta@wur.nl
* Corresponding author
Abstract:
The objective is analysing the conformation of industry convergence in
probiotics. The paper combines the theory of industry convergence with the
research field of chain and network analysis. We employ a literature and patent
analysis of probiotics using 8,245 scientific publications and 2,082 patents.
Thereafter, we analyse four bacteria strains with probiotics features using a
netchain analysis. There are signs of industry convergence showed by the
patenting behaviour of distinct industrial backgrounds leading to effects in the
inter-industry relationships within the netchain. Insights in industry
convergence delivered by bibliometric and netchain analysis may help to
implement successful innovations.
Keywords: Industry convergence; netchain analysis; patent analysis;
functional ingredient; probiotics
1
1 Introduction
Since almost four decades the idea of converging industries fascinates researches and
practitioners alike. By the description of convergence in the area of the computing and
telecommunication systems first mentions in literature can be found in the late 1970s (Farber
and Baran, 1977). Subsequently, with the growing interest in this research field many
scientific as well as popular scientific publications can be found focussing the overlapping
segments reaching to the new industry field of information and communication technology
(ICT) (e.g., (Henderson and Clark, 1990), (Katz, 1996), (Prahalad, 1998), (Bröring and Leker,
2007)). Another current example of convergence can be found in the nutraceuticals and
functional food sector which emerges at the borderline between the food and the
pharmaceutical industry (Bröring et al., 2006). Related to that phenomenon, a growing
number of different functional ingredients is available on the food market especially within
the last decade (Ares et al., 2008). Thereby, the food ingredient category of probiotics
presents a rather young group beside the more classical functional ingredients like vitamins
and minerals. Concurrently, food products containing probiotics are of a high relevance for
the rapidly changing food market (MarketsandMarkets, 2010). These fast modifications
within the food market force companies to search for a strategy which is successful within the
highly competitive environment. Because of that, the knowledge of the competitive
environment along the supply respectively value chain is very important to establish a
competitive advantage (Porter, 1985). Beyond that, extensive literature deals with analyses of
chain and network sciences (Omta, 2004) leading to a concept called “netchain analysis”
combining horizontal layers of firms within a particular group and the vertical arrangement of
these layers in a sequentially chain referring to a classical supply chain (Lazzarini et al.,
2001). As the tool of netchain analysis focuses on the consideration of interdependencies
between companies, it seems to be a useful approach to scrutinise industry convergence.
Therefore, the aim of this paper is first of all to analyse signs of an industry convergence
process and secondly to describe the configuration of this process. Thus, we use patent data of
probiotics in general as a quantitative measure and a netchain analysis based on different
bacteria strains to describe the structure more detailed (qualitative measure). In doing so,
patent analysis starts from the front end of the supply chain within the research and
development (R&D) contrary to the netchain analysis commencing from the back end of the
chain. Within the netchain analysis different commercialised bacteria strains are scrutinised
considering the industrial background of the processing as well as the developing firm. We
use probiotics as one example for the emerging area of nutraceuticals and functional foods at
the borderline of foods and drugs to show patterns of industry convergence and focus
especially on collaborations between different industry sectors. In line with the setup of the
paper consisting of two parts, we try to answer the following two research questions (RQ):
RQ1: Are there signs of industry convergence in the area of probiotics?
RQ2: Does industry convergence have an effect on the (inter-) industry relationships in the
netchain?
The remainder of this paper is structured as follows. In the next section we will describe the
concept of industry convergence showing the different research streams in the literature.
Thereby, we give a short overview on patent analysis as one tool to scrutinise industry
convergence. Secondly, we focus on the theory of chain and network sciences in general as
well as the concept of netchains in detail, both in close relation with the concept of industry
convergence and the coherent challenges. Thirdly, we will present our results including a
patent analysis as well as a netchain analysis about the functional ingredient category
probiotics in the area of the emerging industry segment of nutraceuticals and functional foods.
2
Finally, we will discuss our findings and their implications for academics and practitioners
alike, before concluding with an outlook on future research possibilities.
2 Industry convergence
Multifaceted definitions of industry convergence are used in the extensive literature about this
phenomenon. The common idea within this concept is summarised by the Organisation for
Economic Co-operation and Development (OECD) as follows “the blurring of technical and
regulatory boundaries between sectors of the economy” (OECD, 1992). This implies that
formerly distinct industry areas start to produce similar products in an emerging field of new
approaches. This phenomenon of blurring boundaries between formerly distinct industry areas
can be observed for instance from the telecom industry and camera technology developing the
new segment of camera phones (Hacklin, 2008) or the segment of cosmeceuticals on the
borderline of personal care and food & agriculture sector (Bröring, 2005). A major future
trend whose progress has already started is the development of intelligent buildings. Thereby,
building technologies and information technology contribute to each other (Hacklin, 2008).
But also between the food and pharmaceutical industry signs of industry convergence
delineate (Bröring, 2010, Curran et al., 2010) showing different patterns for example in the
area of the two functional ingredients probiotics and phytosterols (Bornkessel et al., 2011). In
line with the convergence of technologies being one driver of industry convergence the
underlying technological platforms of the formerly distant industry sectors become more alike
(Gambardella and Torrisi, 1998, Fai and von Tunzelmann, 2001). Following this reasoning
one can also assume that application areas (as detailed in patents) of the commonly used
technology platforms are becoming increasingly broad as they build the basis of product
development for two different industries. Therefore, the first hypothesis to be tested with the
patent data can be derived:
H1: If industry sectors converge, the application areas of the developed technology become
more versatile.
Concurrently to the upcoming versatility the stretch of resources to serve the adjacent industry
resp. emerging inter-industry segment might lead to competence gaps of the involved firms.
Therefore, industry convergence processes imply that competence gaps might arise.
Several literature sources describe industry convergence as a process (e.g., (Curran, 2010)),
whereas there are multifaceted attempts to scrutinise this process by dividing it into different
steps (Hacklin, 2008). One possibility is the description of the consecutive steps: science,
technology, market and industry as an idealised time series of events leading to a complete
convergence. The initial step implies that distinct scientific disciplines begin to cite each other
in interaction with first collaborations of scientific disciplines. Decreasing the distance
between applied sciences and technology development is defined as the second step. The
subsequent arising of new product-market combinations is called market convergence. The
final step of industry convergence incorporates fusion of firms or industry segments (Curran
et al., 2010). Therefore, the second hypothesis to be tested with the data on scientific
publications and patent documents arises:
H2: If industry sectors converge, a time lag between the first increase of scientific
publications and patent documents designate the first phase of industry convergence.
Beside the distinction of consecutive steps also different levels are described. Therefore,
industry convergence is discussed to occur in any combination at three different levels: firstly
product-market level, secondly technology level and thirdly firm level (Duysters and
Hagedoorn, 1998). Bröring enhanced this view of different levels with the aspects of
3
regulations as well as standards and institutions (Bröring, 2005). As the promise of
convergence is not only associated with opportunities and growth (Hacklin, 2008), it seems to
be important to differentiate between a substitutive and complementary process (Bröring,
2005). By that means, a substitutive process leads to industry fusion, two distinct industry
sectors become one (“1+1=1”). A substitutive relation implies the replacement of the
conventional approaches proceeds. On the contrary, a complementary process is highlighted
by the creation of a new sector emerging between the old ones leading to an inter-industry
segment (“1+1=3”). Considering that industry convergence is highly relevant for researchers
and practitioners alike the question arises: How to describe and to measure industry
convergence? First approaches using patent data to analyse industry convergence indicate that
patent analysis is a useful tool to scrutinise industry convergence processes (Curran et al.,
2010).
Patent analyses with their specific statistics allow measuring the inventiveness of different
actors like countries, regions or firms of different industrial backgrounds as well as the
mapping of certain aspects of the dynamics of the innovation process (OECD, 2008).
Thereby, patent propensity rate is a potentially valuable indicator inter alia for innovation
activities and varies between different industry sectors (Arundel and Kabla, 1998). Several
theoretical concepts can be witnessed within the literature using patent data to analyse
processes and trends. One important concept is the application of the technology life cycle to
a “patent life cycle” ((Ernst, 1998) ref. Figure 1). The patent life cycle can be divided into the
three sections of emerging, consolidation and market penetration (Ernst, 1998). There are
multifaceted reasons for using patent data for technology life cycles, e.g., the information
about the technological development itself and that the information is available before the
product life cycle starts (Haupt et al., 2007). Because the attractiveness of different markets
influences the technology life cycle and consequently also the patent life cycle (Haupt et al.,
2004), different life cycles occur in distinct markets. Therefore, the concept of patent life
cycle appears to be a useful tool to interpret results according to the phenomenon of industry
convergence.
Figure 1 Theoretical life cycle of patents adapted from (Ernst, 1998)
Patent
application
I
Emerging
II
Consolidation
III
Market penetration
Time
Beside the several descriptive methods also different statistical methods can be applied to
patent data. In the context of these statistical methods the establishment of patent indicators is
essential and can be divided into different types according to attribution and purpose (Tseng
et al., 2011).
To summarise the theoretical aspects considering the phenomenon industry convergence and
patent analysis as a tool to describe industrial developments, extensive literature about the
phenomenon of industry convergence as well as about patent analyses shows a long history of
research interest. Although first approaches using patent data to identify signs of industry
convergence can be found in recent years (e.g., (Curran et al., 2010)), there is still a lack of
empirical evidence.
4
3 Chain and network sciences to analyse industry convergence
Chain and network sciences are of a high relevance for structural analysis of industries and
industry developments (Omta et al., 2002). The differentiation between supply chains, value
chains and network analysis as well as their definition is an essential basic requirement for
chain and network analyses. Thereby, supply chain is commonly defined as “a set of
sequential, vertically organized transactions representing successive stages of value
creation” (Lazzarini et al., 2001). The most common definition of value chains from
Kaplinsky and Morris (Kaplinsky and Morris, 2000) also used by the FAO defines a value
chain as “the full range of activities which are required to bring a product or service from
conception, through the different phases of production… delivery to final consumers, and
final disposal after use”(Kaplinsky and Morris, 2000). Within the broad field of network
analysis originated in social sciences, networks can be defined as follows: “All of the actors
within one industrial sector, or between related industrial sectors, which can (potentially)
cooperate to add value for the consumer.” (Omta, 2004). This definition of network
highlights the close connection and the relevance of network analysis with the concept of
industry convergence.
In terms of industry convergence different value chains start to build areas of overlap in the
area of nutraceuticals and functional foods. However, the incumbent industry sectors food and
pharmaceuticals remain and do not fade away. Therefore, the case of nutraceuticals and
functional foods delivers an example for a complementary convergence (1+1=3) resulting in
a new inter-industry segment (ref. Chapter 2). Moreover, literature distinguishes the process
of convergence (ref. Chapter 2) on the basis of two main orientations: input-side and outputside convergence (Bröring and Cloutier, 2008). On the one hand, the input-side is defined as
the application of technologies across different industries and on the other hand, the outputside convergence is observable in market-pull orientation to satisfy several needs in one
transaction (Bröring and Cloutier, 2008). Within the example of nutraceuticals and functional
foods both orientations can be witnessed: Biotechnology Genomics showing the input-side
and the trends towards preventions (Gray et al., 2003) demonstrating the output-side (Bröring
and Cloutier, 2008), (ref. Figure 2).
Figure 2 Emerging value chain of nutraceuticals and functional foods (Source: (Bröring and Cloutier, 2008))
Combining the above described theory concepts of supply chains, value chains and network
analysis, Lazzarini et al. introduced the concept of netchain – “a set of networks comprised of
horizontal ties between firms within a particular industry or group, such that these networks
(or layers) are sequentially arranged based on the vertical ties between firms in different
layers” (Lazzarini et al., 2001), (see Figure 3). In an example of a generic netchain, the four
vertical layers include suppliers, manufacturers, distributors and consumers showing the same
conformation as a classical supply chain. Within the different layers, there can be different
kinds of relationships reaching from cooperative work to fusion of organisations.
5
Figure 3 An example of a generic netchain (adapted from (Lazzarini et al., 2001))
Suppliers
Manufactures
Distributors
Consumers
As the assessment of interdependencies in a given inter-organisational setting can be the first
analytic step (Lazzarini et al., 2001) to scrutinise industrial structures, it can be a useful tool
to analyse industry convergence by employing a netchain analysis. Once can assume that due
to increasing competence gaps of the single actors in industry convergence resulting in a
higher need for collaboration, netchain relationships are becoming increasingly complex
within a context of convergence. This leads us to the following hypothesis:
H3: The higher the degree of industry convergence, the more complex are netchain
relationships.
Knowing the design of interdependencies gives first hints to formulate inter-organisational
strategies (Lazzarini et al., 2001). As competing in related industries with coordinated value
chains may lead to a competitive advantage (Porter, 1985), consideration of chains and
networks in terms of industry convergence is very important.
4 Sample and methodology
Against this background, the study at hand aims to identify signs of industry convergence as
well as relationships of different industrial backgrounds in converging industries. Based on
quantitative and qualitative data the study at hand follows a mixed-method approach
(Latcheva, 2011, Johnson and Onwuegbuzie, 2004). Thereby, data on patents deliver
quantitative measures following a confirmative approach verifying the two hypotheses H1 and
H2 derived from literature. Qualitative data is generated by the netchain analysis testing
hypothesis H3. Both data sets focus on the functional ingredient category of probiotics
emerging at the borderline of foods and drugs – an example for an area of industry
convergence. The directions of data collection and analyses are contrarily (see Figure 4): On
the one hand, patent analysis starts from the front end of the supply chain as patents are one
indicator for research and development of companies. On the other hand, the netchain
analysis starts from the market, therefore the end of the supply chain as the considered
bacteria strains are available in existing products within the market.
Figure 4 Study procedure
General supply chain
Research and
development
Patent analysis
Backwards analysis
Production
Commercialisation
Consumer
Netchain analysis
Forecasting
6
a) Literature and patent analysis
In line with earlier research stressing the importance of scientific literature and patent
analysis, we analyse 8,245 scientific publications as well as 2,082 patent documents published
worldwide considering the functional ingredient probiotics. Thereby, for both document types
the duplicate entries as well as non-company entries are excluded. In case of scientific
publications the top 50 organisations are included leading to 629 considered scientific
publications and 527 considered patents. We evaluate a time frame between 1990 and 2009
using the Thomson Innovation software tool. Thomson Innovation is a platform that
facilitates analysis of intellectual property, scientific literature and business data (Thomson
Reuters, 2011). It draws upon the DWPI (Derwent World Patents Index), a database which
categorizes patent documents using a classification system for all technologies. Thus, the first
indicator of our research strategy is the publication type whether it is a scientific publication
or a patent document. To classify scientific publications as well as patents, they are
scrutinised regarding their application areas using their keywords from title and abstract of
each publication. By that means, the considered application areas are pharmaceuticals,
personal care and food & agriculture, whereas the remaining scientific publications which do
not match into one of these groups are summarised in the category “rest”. Standard Industrial
Classification (SIC) codes are used to analyse the industrial background of the patent filing
companies. By this means, SIC is a United States government system that indicates the
company’s type of business (U.S. Securities and Exchange Commission, 2011). We focus on
the four industry segments on the subject of the analysis of patents: pharmaceuticals,
chemicals, personal care and food & agriculture (ref. Table 1). To scrutinise the chronology of
industry convergence we use the concept of the patent life cycle by Ernst (1998) as well as the
description of the mainly four steps of industry convergence introduced by Hacklin (2008)
and Curran et al. (2010).
Table 1 Overview of used indicators
Measure
SIC (industrial
background)
IPC (application area)
Characteristics
Pharmaceuticals
Chemicals
Personal care
Food & agriculture
Pharmaceuticals
Personal care
Food &
agriculture
Rest
Publication type
Scientific publication
Patent
b) Netchain analysis
Based on the report “Global Probiotics Market” by Marketsandmarkets in 2010
(MarketsandMarkets, 2010) and scientific literature about probiotics (e.g., (Siezen and
Wilson, 2010)) as well as further desk research the creation of a list of bacteria strains
currently available on the global market is established. There out, four bacteria strains namely
Lactobacillus Caseii DN 114001, Bifidobacterium Bb12, Lactobacillus acidophilus LA5 and
Lactobacillus Rhamnosus are chosen to illustrate the connections within a netchain, therefore
following the vertical axis of the supply chain and the horizontal axis of the interactions
between the companies on the different layers. Information about the industry behind the
product and manufactures is obtained from academic articles and consumer websites. This
data builds the basis for the elaboration of the netchain.
5 Main findings
The following section is structured as follows. In the first three parts results from literature
and patent analysis are shown, including firstly the consideration of the industrial background,
secondly the results according to application areas and thirdly the timely elaboration including
7
the application of Ernst’s concept of patent life cycles and the idealised time series of industry
convergence to the probiotics case. The fourth part deals with the netchain analysis with an
illustration of the netchain including the analysis of four bacteria strains with probiotics
features.
5.1 Results according to the industrial background of the active companies
Generally, there is an increase of the total amount of scientific publications as well as patent
documents in the research field of the functional ingredient category of probiotics. The active
industrial backgrounds are the food & agriculture, the pharmaceutical, the personal care and
the chemical sector. Thereby, the pharmaceutical and chemical sector are summarised within
Figure 5 and Figure 6 due to their overlapping business models. The first increase in
publications starts three years earlier (1997) than the raise in patent documents (2000). The
amount of scientific publications by the food & agriculture sector outnumbers those from the
other sectors. The high number of scientific publications by collaborations shows the interest
of distinct industry sectors in the area of probiotics and therefore gives first evidence for
industry convergence processes. Due to the low number of scientific publications about
probiotics published by the personal care sector this division can be neglected within the
further description and discussion. Applying the patent life cycle introduced by Ernst (Ernst,
1998) also to scientific publications, the three phases can be shown in case of the food &
agriculture sector: firstly, the emerging phase from 1995 to 2002, secondly, the consolidation
phase from 2002 to 2004 and thirdly the market penetration phase from 2004 to 2006. As
there is only a short consolidation phase it seems that the consolidation phase does not start
until 2005. Therefore, future data is needed to give a more detailed interpretation. In case of
the pharmaceutical & chemical sector as well as collaborations the consolidation phase starts
from 2007.
Figure 5 Number of scientific publications according to the industrial background of the active companies
Number of scientific publications
70
60
50
40
30
20
10
0
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Pharmaceuticals & Chemicals
Personal care
Food & Agriculture
Collaborations
Overall, one can observe an increase in the total number of patents over the time whereas the
first notable increase starts in the year 2000. As Figure 6 illustrates with the number of patents
according to the industrial background of the filing companies, there is a clear dominance of
the food & agriculture sector although there is a slight decrease in the total number of patents
from 2003 to 2005. The dominance of the food & agriculture sector might be due to the
different application areas in feed and food. One reason for the reiterated increase (2007) in
the food & agriculture sector might be the new regulations in Europe considering the
prohibition of antibiotics in feed. In interpreting the findings considering the personal care
sector, we have to take into account that only two companies of this sector are active in the
area of probiotics.
Moreover, especially in the later years the number of patents filed by collaborations increases.
These collaborations include intra-firm as well as inter-firm collaborations. The presence of
both kinds of collaborations can be seen as one sign for the process of industry convergence.
Applying Ernst’s patent life cycle to the line of the food & agriculture sector, the first three
8
phases can be shown: firstly, the emerging phase from 1998 to 2002, followed by a
consolidation phase from 2003 to 2005 and thirdly the market penetration phase from 2005
on. Concurrently, the pharmaceutical & chemical sector shows an increase up to 2005
followed by a decrease possibly presenting the consolidation phase relating to Ernst’s patent
life cycle.
Figure 6 Number of patents according to the industrial background of the filing companies
70
Number of patents
60
50
40
30
20
10
0
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Pharmaceutcials & Chemicals
Personal care
Food & Agriculture
Collaborations
Regarding the number of patents per company the data shows that there are a few major
players followed by a large group of companies which filed less than 10 patents in the area of
probiotics within the chosen time frame of 19 years. These major players are characterised by
a high activity in patenting right from the first increase in patent documents, therefore the first
interest in this topic. The earlier starting point of these major players also explains their higher
total number of filed patents.
5.2 Results according to application areas of patents
Considering the application areas of the different patent documents in relation to the industrial
background of the filing companies it can be shown that the sector of food & agriculture is
most active in its own application area (i.e. food & agriculture). But this sector also shows
activity in other areas than its core business, e.g., in scope of pharmaceuticals. On the
contrary, the personal care sector is only active in its own application area (ref. Table 2).
Collaborations of companies – inter- as well as intra-company collaborations – are active in
all application areas. The activity of the food & agriculture sector with patents in more than
one application area shows a higher versatility than the other industry sectors for the
probiotics case.
Considering the proportion of patents in own application areas and extern areas, the personal
care sector shows the lowest rate of extern areas (4,6 %). On the contrary, the food and
agriculture sector presents the highest rate (38,8 %) followed by the pharmaceutical industry
(33,3 %). These rates can be used as one indicator for the versatility of distinct industry
sectors in certain research fields.
Table 2 Number of per industry sectors and application areas
Industry sector
Personal
care
Food &
agriculture
Pharmaceuticals
Chemicals
Collaborations
Personal care
Food & agriculture
21
0
0
175
0
9
0
32
17
17
Pharmaceuticals
None of the three
Application in more
than one application
area
0
0
36
18
46
7
30
4
18
4
1
57
7
19
9
Total amount
22
286
69
85
65
Application area
9
5.3 Results according to the chronology
Applying Ernst’s concept of patent life cycles (Ernst, 1998) to scientific publications as well
as all patent documents and patents filed by collaborations differences can be shown (see
Figure 1, Figure 7). Firstly, in case of scientific publications the emerging phase leads roughly
to 1998, followed by a short consolidation phase to 2000. The next phase is characterised by
an increase and lasts roughly 6 years up to the year 2006. After 2006 the number of scientific
publications remains almost constant. Secondly, examining all patent documents the emerging
phase is characterised by slight increase (2001-2003) reaching an intense increase from 2003
on. A consolidation phase cannot be shown by the patent data. Thirdly, patents filed by
collaborations show an increase from 2004 on. The slight decrease in the number of patents
from 2007 to 2008 might be seen as a short consolidation phase leading to a strong increase
(market penetration phase). The starting point of the life cycle differs between the three
considered publication types whereas a first time shift from scientific publications to all
patent documents lasts roughly 3 years. The second shift from the life cycles of all patent
documents to patents filed by collaborations takes also about 3 years.
By means of the above presented data the four main steps of industry convergence science,
technology, market and industry (Hacklin, 2008, Curran et al., 2010) can be seen in the case
of probiotics. Firstly, distinct scientific disciplines show R&D output in the field of probiotics
indicated by the activity in publishing scientific articles (ref. Figure 7). Secondly, the distance
between applied sciences and technology development decreases shown by the increase of
activity in patenting (ref. Figure 6, Figure 7). Thirdly, taking Ernst’s patent life cycle as a
basis, the market phase with an increasing number of patents can be shown. Fourthly,
focusing at the inter- and intra-firm collaborations of the active companies also the last step of
industry convergence is in evidence.
Figure 7 Comparison of trendlines of scientific publications and patents
120
y = 0,0091x4 - 0,2758x3 + 3,0062x2 - 11,12x + 10,679
R² = 0,9801
100
Total number
80
60
40
y = 0,0003x4 + 0,0028x3 + 0,0961x2 - 0,6441x + 1,231
R² = 0,9921
20
0
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
y = 0,0004x 4 - 0,0088x 3 + 0,0633x 2 - 0,1734x + 0,192
R² = 0,8648
Scientific publications
Patents
Patents from collaborations
Overall, the trendlines of scientific publications, patent documents in general and patents filed
by collaborations show a continual increase. Thereby, a timely shift can be shown whereas the
curve of scientific publications increases earliest with the highest steepness, thus, happens to
be positioned in front of the curve of all patents. The shift between all patents and patents
filed by collaborations is more obvious. The incline of the scientific publications trendline is
10
highest followed by the incline of all patent documents whereas the lines show first an almost
parallel progress before within scientific publications the consolidation phase is reached. The
incline of patens filed by collaborations is lower. That might be due to the fact that the
collaborations are supposed to be right at the beginning of their increase.
5.4 Results netchain analysis
Analogue the described netchain analysis (Lazzarini et al., 2001) the vertical axis is divided
into the classical steps of a supply chain, in particular research & development (technology
developers), production (processing company), market outlets (product category) and
consumers (see Figure 8). Starting from the four bacteria strains Lactobacillus Caseii DN
114001, Bifidobacterium Bb12, Lactobacillus acidophilus LA5 and Lactobacillus Rhamnosus
as examples of bacteria with probiotics features the distinct arrows describe the way of the
four different strains through the netchain. The different forms within the layers show the
industrial background of the active company (e.g., a circle for companies from the food &
agriculture industry). Thereby, the classification is analogue the patent data according to SIC
codes (Food & agriculture, Pharmaceutical, Personal care and Chemical). The number within
the distinct forms indicates each for one company in order to visualise the activity of certain
companies on different levels within the value chain. Products containing probiotics are sold
on B2C (Business-to-consumer) as well as on B2B (Business to business) markets in case of
the four considered bacteria strains through the distributions channels as follows:
supermarkets, drugstores and feed retailers.
Figure 8 Netchain analysis according to four different bacteria strains
Food & Agriculture
Lactobacillus
Caseii DN 114001
Bacteria strains
Technology
developers
Pharmaceuticals
Chemicals
Bifidobacterium
lactis Bb12
3
Lactobacillus
acidophilus LA5
Lactobacillus
Rhamnosus
2
1
3
?
1
1
1
Research organisation
Personal Care
2
Processing
company
Market
outlets
4
1
1
2
4
5
5
Food 4
Food 1
Supermarkets
Consumer
segments
3
1
Food 3
Food 5
Food 6
Food
supplement 1
Cosmetics 1
Food 2
Food
supplement 2
Drugstores
Health oriented
consumers
 B2C
Supplement taking
consumers
 B2C
Feed
supplement 1
Feed retailer
Farmers
 B2B
Companies from different industrial backgrounds show distinct activities on the different
layers of the netchain. In that context technology developers are from all four industrial
backgrounds whereas the processing companies are dominated by the food & agriculture
sector. Consequently, food products dominate within the layer of market outlets the
11
commercialised goods. Consumer segments can be roughly divided on the one hand into B2C
and B2B as well as on the other hand into the three major groups of health oriented
consumers, supplement taking consumers and farmers. Furthermore, collaborations can be
seen on the level of technology development as well as on the processing layer. These
collaborations are formed by companies from different industrial backgrounds active on
different levels in the value chain. Considering the four bacteria strains, pharmaceutical
companies are always involved in the development and market launch of supplement
products.
6 Discussion and conclusion
The results from patent and netchain analysis show an increasing interest in the functional
ingredient category probiotics from different industrial backgrounds. Thereby, the food and
agriculture sector is dominant, especially on the level of processing.
Discussing the value of patent analysis in terms of industry convergence, generally one needs
to take into account that on the one hand patent analysis is closely linked to technology
development as patents give a close link to inventions. But on the other hand not all
inventions are patented with the result that patents do not cover all existing inventions. As
patent documents contain detailed information and are quite readily available they deliver a
useful information source. This information also includes the industrial background of the
filing company. That is one reason for the usefulness of patent analysis in case of industry
convergence.
As the interest of different industrial backgrounds, e.g., the pharmaceutical & chemical
industry increases over the considered time frame revealed by the increase of filed patents
first signs of an ongoing process of industry convergence are evident (ref. RQ1). Especially
the huge increase of patents filed by collaborations in the later years confirms this
phenomenon. As not the single bacteria strains are patented but their application within e.g., a
food product the affinity to the common technology platform of probiotics of companies from
both industries can be shown. Another sign for industry convergence in case of probiotics is
given by the fact that the filed patents reveal distinct application areas. That implies that
companies also promote research in areas outside their core business. They increasingly
involve in application areas in the adjacent industry area, leading to the emergence of a new
inter-industry sector – a result of convergence. On that account, hypothesis H1 stating that
application areas become more versatile in terms of industry convergence can be adopted (ref.
Table 2).
Considering the timely development both the concept of Ernst’s patent life cycle as well as
the idealised time series introduced by Curran et al. (2010) indicate an industry convergence
process. With regard to these idealised descriptions of the development researchers and
practitioners alike are enabled to anticipate the expected following steps to face the challenges
within converging markets and therefore derive a competitive advantage. Another reason for
the possibility to anticipate future trends is that patent information is available before the
product is on the market. Although a previous study on the functional ingredient category
phytosterols show a consolidation phase within the number of filed patents (Curran, 2010)
this phase cannot be shown for all industrial backgrounds within the probiotics case. A time
lag between the first increase of scientific publications and patent documents can be shown in
the probiotics’ case (ref. Figure 5, Figure 6, Figure 7) referring to described idealised time
series of industry convergence. Because of this time lag the first phases of an industry
convergence process are evident and hypothesis H2 can be adopted.
Regarding the qualitative measure – the netchain analysis of the four bacteria strains, we also
find evidence for industry convergence. This is because companies of different industrial
backgrounds are active on the distinct layers of the netchain. Collaborations can be also
12
shown by this analysis, hence, another hint for industry convergence. The netchain analysis in
the probiotics’ case shows effects on the inter-industry relationships in terms of industry
convergence (ref. RQ2) with a certain complexity. As there are signs for industry convergence
in the first phases, the complexity of the netchain relationships is not yet fully developed (ref.
H3). The complexity is supposed to increase in the coming years concurrently with the
process of industry convergence.
As the data on the bacteria strains is only gathered through publicly available sources it is not
possible to detect all connections and therefore collaborations. That implies that there are
several more ongoing collaborations not shown in the netchain diagram. These supposed
additional collaborations indicate also for industry convergence processes. Following a retroperspective point of view there is only a status analysis possible leading to suggestions for
future trends. The number of connections of companies as well as the activity on different
layers within the netchain indicates for a strong network. Benefiting from a strong network
companies might be able to establish a competitive advantage.
As both tools – patent and netchain analysis – include the above described advantages and
drawbacks, the analysis of industry convergence might benefit through a combination of both
methods. Patent analysis deliver a nearly holistic view on co-operations between different
companies but the complexity of collaborations cannot be shown in patent data. Therefore,
netchain analysis can complement patent analyses by the information of complexity. If signs
of industry convergence can be observed within the first step of patent analysis, a deeper
elaboration of a limited amount of firms within a netchain analysis delivers information on the
complexity. Applying this mixed-methods approach, strengths of an additional method
overcome the weaknesses in another method by using both.
To summarise the results on patent and netchain analysis there are clear signs of industry
convergence in case of probiotics. Both analyses turn out to be good indicators to show
industry convergence processes, especially the combination of the distinct tools. Nevertheless,
more work is needed to enlarge and structure the knowledge about industry convergence in
the area of nutraceuticals and functional foods. Therefore, future research could concentrate
on other functional ingredients to establish the usefulness of the two measures – patent
analysis and netchain analysis.
We contribute to the existing body of literature by shedding light on the underlying dynamics
and rationales of converging industries using patent and netchain analysis. More particularly,
we extend Ernst’s tool of patent life cycles to the domain of scientific publications.
Consequently, the literature on convergence is complemented by empirical findings leading to
a deeper understanding of the influencing factors on its dynamics. While the theoretical
contribution revolves around the explanation of convergence characteristics, practical
contributions lie in the transferability of the employed methodology to other areas of
(potential) convergence and their easy applicability.
Managerial implications arise from the high strategic importance of industry convergence,
enabling firms to prepare for changes in demand structures, technological shifts, and future
competitors. The combination of potentially anticipatory bibliometric and patent analyses
with the market oriented netchain analysis enables practitioners to effectively examine their
relevant industry sectors and technological fields. Gained insights can then be used to realign
their firms’ competencies and alliances to the necessities in a setting of convergence.
13
Acknowledgements
The authors would like to thank the researches from TIFN for support and access to the
respective databases and especially Frances Fortuin, Supranee Tangnatthanakrit and Hilde
Boschloo from Wageningen University.
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