Predation in Off-Patent Drug Markets
AbstractIn 2009, Sanofi-Aventis, whose generic subsidiary is Winthrop, merges with the generic firm, Zentiva. This paper fills the gap in the theoretical literature concerning mergers in pharmaceutical markets. To prevent generic firms from increasing their market share, some brand-name firms produce generics themselves, called pseudo- generics. We develop a Cournot duopoly model by considering the pseudo-generics production as a mergers' catalyst. We show that a brand-name company always has an incentive to purchase its competitor. The key insight of this paper is that the brand-name laboratory can increase its merger gain by producing pseudo-generics beforehand. In some cases, pseudo-generics would not otherwise be produced and this production is then a predatory strategy.
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Bibliographic InfoPaper provided by HAL in its series Post-Print with number halshs-00537018.
Date of creation: 2012
Date of revision:
Publication status: Published, Applied Economics, 2012, 44, 17, pp. 2171-2186
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Mergers; Pharmaceutical Market; Predation; Pseudo-Generics;
Other versions of this item:
- I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
- L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-11-27 (All new papers)
- NEP-BEC-2010-11-27 (Business Economics)
- NEP-COM-2010-11-27 (Industrial Competition)
- NEP-IND-2010-11-27 (Industrial Organization)
- NEP-IPR-2010-11-27 (Intellectual Property Rights)
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