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The importance of being first: evidence from Canadian generic pharmaceuticals

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  • Aidan Hollis

    (Department of Economics, University of Calgary, Canada)

Abstract

This paper uses pooled cross-section data on Canadian ethical drug sales to examine the effect of entry timing on sales of generic drugs. The data is for all drugs for which the first generic competitor entered during the years 1994-1997. It is found that the first generic entrant has a lasting competitive advantage: being first into the market appears to lead to an increase of around 30% in market share (among generics) over a period of at least 4 years. This finding has considerable implications for the current policy of allowing brandname drug companies to issue pseudo-generic equivalents as a preemptive strike against true generic competitors. Copyright © 2002 John Wiley & Sons, Ltd.

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File URL: http://hdl.handle.net/10.1002/hec.698
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Bibliographic Info

Article provided by John Wiley & Sons, Ltd. in its journal Health Economics.

Volume (Year): 11 (2002)
Issue (Month): 8 ()
Pages: 723-734

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Handle: RePEc:wly:hlthec:v:11:y:2002:i:8:p:723-734

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Web page: http://www3.interscience.wiley.com/cgi-bin/jhome/5749

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References

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  1. Danzon, Patricia M & Chao, Li-Wei, 2000. "Does Regulation Drive out Competition in Pharmaceutical Markets?," Journal of Law and Economics, University of Chicago Press, vol. 43(2), pages 311-57, October.
  2. Jorge Mestre Ferrándiz, 1999. "The impact of generic goods in the pharmaceutical industry," Health Economics, John Wiley & Sons, Ltd., vol. 8(7), pages 599-612.
  3. Gorecki, Paul K., 1986. "The importance of being first : The case of prescription drugs in Canada," International Journal of Industrial Organization, Elsevier, vol. 4(4), pages 371-395, December.
  4. Gorecki, Paul K., 1987. "Barriers to entry in the Canadian pharmaceutical industry : Comments, clarification and extensions," Journal of Health Economics, Elsevier, vol. 6(1), pages 59-72, March.
  5. McRae, James J. & Tapon, Francis, 1985. "Some empirical evidence on post-patent barriers to entry in the Canadian pharmaceutical industry," Journal of Health Economics, Elsevier, vol. 4(1), pages 43-61, March.
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Cited by:
  1. Roger Feldman & Félix Lobo, 2013. "Competition in prescription drug markets: the roles of trademarks, advertising, and generic names," The European Journal of Health Economics, Springer, vol. 14(4), pages 667-675, August.
  2. Vasco Rodrigues & Ricardo Gonçalves & Hélder Vasconcelos, 2014. "Anti-Competitive Impact of Pseudo-Generics," Journal of Industry, Competition and Trade, Springer, vol. 14(1), pages 83-98, March.
  3. Ivan Moreno-Torres, 2011. "Generic drugs in Spain: price competition vs. moral hazard," Working Papers XREAP2011-04, Xarxa de Referència en Economia Aplicada (XREAP), revised May 2011.
  4. Patricia M. Danzon & Eric L. Keuffel, 2013. "Regulation of the Pharmaceutical-Biotechnology Industry," NBER Chapters, in: Economic Regulation and Its Reform: What Have We Learned?, pages 407-484 National Bureau of Economic Research, Inc.
  5. Appelt, Silvia, 2010. "Authorized Generic Entry prior to Patent Expiry: Reassessing Incentives for Independent Generic Entry," Discussion Papers in Economics 11476, University of Munich, Department of Economics.
  6. Tommaso Valletti & Stefan Szymanski, 2006. "Parallel Trade, International Exhaustion and Intellectual Property Rights: A Welfare Analysis," CEIS Research Paper 75, Tor Vergata University, CEIS.
  7. Saradindu Bhaduri & Thomas Brenner, 2013. "Examining the determinants of drug launch delay in pre-TRIPS India," The European Journal of Health Economics, Springer, vol. 14(5), pages 761-773, October.
  8. Aidan Hollis, 2003. "The Anti-Competitive Effects of Brand-Controlled "Pseudo- Generics" in the Canadian Pharmaceutical Market," Canadian Public Policy, University of Toronto Press, vol. 29(1), pages 21-31, March.
  9. Santiago, Fernando & Alcorta, Ludovico, 2012. "Human resource management for learning through knowledge exploitation and knowledge exploration: Pharmaceuticals in Mexico," Structural Change and Economic Dynamics, Elsevier, vol. 23(4), pages 530-546.
  10. Saradindu Bhaduri & Thomas Brenner, 2011. "Determinants of drug launch delay in pre-TRIPS India: A survival analysis approach," Working Papers on Innovation and Space 2011-05, Philipps University Marburg, Department of Geography.
  11. Paul Grootendorst, 2007. "Effects of 'Authorized-Generics' on Canadian Drug Prices," Social and Economic Dimensions of an Aging Population Research Papers 201, McMaster University.

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