Entry Time Effects and Follow-on Drugs Competition
AbstractPharmaceutical firms have been criticized for concentrating their efforts of R&D on the so called “me-too” or “follow-on” drugs. There have been many comments against and favourable to the dissemination of these incremental innovations but few papers have broached the subject from an empirical point of view, possibly because identification of “me-too” is not so obvious. This paper focuses on the impact of entry order on “follow-on” drugs competition in the French market between years 2001 and 2007. More precisely, this study examines the effects on market share of first entrants in the follow-on drug market and how this possible competitive advantage changes over time. Our results are coherent with theoretical microeconomic issues concerning the importance of being first. We find evidence that first movers in the follow on drug market have the ability to capture and maintain greater market share for a long period of time. The hierarchical market position of follow on drugs does not seem to be affected by generic drugs emergence. From a dynamic perspective, our analysis shows that market share is positively correlated with the ability of follow on drugs to set prices higher than the average follow-on drug price in a specific therapeutic class (ATC) which means that market power remains considerably important for first movers. Finally we found that the optimum level of innovation to maximize market share is the highest one.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by IRDES institut for research and information in health economics in its series Working Papers with number DT49.
Length: 30 pages
Date of creation: Jun 2012
Date of revision: Jun 2012
Incremental innovation; Follow-on drugs; Entry timing; Market share.;
Find related papers by JEL classification:
- I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
- I12 - Health, Education, and Welfare - - Health - - - Health Production
- L65 - Industrial Organization - - Industry Studies: Manufacturing - - - Chemicals; Rubber; Drugs; Biotechnology
- L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-07-14 (All new papers)
- NEP-COM-2012-07-14 (Industrial Competition)
- NEP-HME-2012-07-14 (Heterodox Microeconomics)
- NEP-IND-2012-07-14 (Industrial Organization)
- NEP-INO-2012-07-14 (Innovation)
- NEP-IPR-2012-07-14 (Intellectual Property Rights)
- NEP-TID-2012-07-14 (Technology & Industrial Dynamics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Alka Chadha & Åke Blomqvist, 2005. "Patent Races, “Me-Too” Drugs, and Generics: A Developing-World Perspective," Departmental Working Papers wp0513, National University of Singapore, Department of Economics.
- Grabowski, Henry, 2002. "Patents, Innovation and Access to New Pharmaceuticals," Working Papers 02-28, Duke University, Department of Economics.
- Carine Franc & Marc Perronnin & Aurélie Pierre, 2010. "Subscribing to Supplemental Health Insurance in France: A Dynamic Analysis of Adverse Selection," Working Papers DT35, IRDES institut for research and information in health economics, revised Dec 2010.
- Caroline Berchet & Nicolas Sirven, 2012. "Cross-Country Performance in Social Integration of Older Migrants. A European Perspective," Working Papers DT46, IRDES institut for research and information in health economics, revised Mar 2012.
- Gregory S. Crawford & Matthew Shum, 2005. "Uncertainty and Learning in Pharmaceutical Demand," Econometrica, Econometric Society, vol. 73(4), pages 1137-1173, 07.
- Sirven, Nicolas & Or, Zeynep, 2010.
"Disparities in Regular Health Care Utilisation in Europe,"
MEA discussion paper series
10231, Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy.
- Nicolas Sirven & Zeynep Or, 2010. "Disparities in Regular Health Care Utilisation in Europe," Working Papers DT37, IRDES institut for research and information in health economics, revised Dec 2010.
- Florence Jusot & Sandy Tubeuf & Alain Trannoy, 2010. "Effort or Circumstances: Does the Correlation Matter for Inequality of Opportunity in Health?," Working Papers DT33, IRDES institut for research and information in health economics, revised Jul 2010.
- Agarwal, Rajshree & Gort, Michael, 2001. "First-Mover Advantage and the Speed of Competitive Entry, 1887-1986," Journal of Law and Economics, University of Chicago Press, vol. 44(1), pages 161-77, April.
- Clément Nestrigue & Zeynep Or, 2012. "Estimation du surcoût des événements indésirables associés aux soins à l'hôpital en France," Working Papers DT44, IRDES institut for research and information in health economics, revised Feb 2012.
- Henry Grabowski, 2002. "Patents, Innovation and Access to New Pharmaceuticals," Journal of International Economic Law, Oxford University Press, vol. 5(4), pages 849-860, December.
- Mohamed Ali Ben Halima & Thierry Debrand & Camille Regaert, 2012. "Sick Leaves: Understanding Disparities Between French Departments," Working Papers DT50, IRDES institut for research and information in health economics, revised Oct 2012.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jacques Harrouin).
If references are entirely missing, you can add them using this form.