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Generic competition and the incentives for early-stage pharmaceutical innovation

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  • Branstetter, Lee
  • Chatterjee, Chirantan
  • Higgins, Matthew J.

Abstract

What impact has rising generic competition had on the nature and direction of pharmaceutical innovation? We find broad-based, strong evidence that pharmaceutical companies have diverted their new drug development efforts away from therapeutic markets already well-served by generic drugs. We also find that increasing generic competition induces firms to shift their R&D activity toward more biologic-based products and away from chemical-based products. We conclude by discussing potential implications of our results for long-run innovation policy.

Suggested Citation

  • Branstetter, Lee & Chatterjee, Chirantan & Higgins, Matthew J., 2022. "Generic competition and the incentives for early-stage pharmaceutical innovation," Research Policy, Elsevier, vol. 51(10).
    • Handle: RePEc:eee:respol:v:51:y:2022:i:10:s0048733322001184
    DOI: 10.1016/j.respol.2022.104595
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