The aims of this research were to assess New Zealand's (NZ) growing drug development industry, and compare it with drug development and biotechnology clusters overseas. This article presents the results of questionnaires administered dutring interviews with 60 senior people representing the industry. It narrates their expertise, knowledge management, and innovative behaviors. NZ's industry comprises highly qualified, very experienced, and motivated people. Their organizations have particular expertise in drug discovery, which has arisen from long-term government support for biomedical research. There is also significant expertise in early-stage clinical development and contract clinical research. Knowledge sharing was rated as better within organizations than externally. The participants gave the highest ratings of their organizations' innovative performance to solving problems that had caused others difficulty, teamwork and having new ideas; they prefer informal methods of knowledge acquisition. These factors may reflect the NZ approach of applying ingenuity to solve problems and preference for casual and internal knowledge sharing. NZ has a hub of drug development activity; however, its size, limited resources, and remoteness from major markets may limit the development of a complete pharmaceutical industry. NZ could be promoted as a unique “country cluster” offering niche areas of expertise especially in drug discovery and clinical research. Drug Dev Res 73: 51–58, 2012. © 2011 Wiley Periodicals, Inc.