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Entry Decisions in the Generic Pharmaceutical Industry

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Author Info
Fiona M. Scott Morton () (School of Management)
Abstract

Data on all generic drug entries in the period 1984-1994 are used to estimate which markets heterogeneous potential entrants will decide to enter. I find that organizational experience predicts entry. Firms tend to enter markets with supply and demand characteristics similar to the firm's existing drugs. Larger revenue markets, markets with more hospital sales, and products that treat chronic conditions attract more entry. The simultaneous nature of entry leads to an additional interpretation: specialization is profitable because of the severe risk to profits when a market is "overentered." However, I am unable to make any conclusions about the efficiency of entry decisions.

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Paper provided by Yale School of Management in its series Yale School of Management Working Papers with number ysm119.

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Date of creation: 16 Jun 1999
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Handle: RePEc:ysm:somwrk:ysm119

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L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
L0 - Industrial Organization - - General

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  1. Hellström, Jörgen & Rudholm, Niklas, 2003. "Uncertainty in the Generic Versus Brand Name Prescription Decision," UmeÃ¥ Economic Studies 602, Umeå University, Department of Economics. [Downloadable!]
  2. Jean Marie Abraham & Martin Gaynor & William B Vogt, 2003. "Entry and Competition in Local Hospital Markets," The Centre for Market and Public Organisation 03/088, Department of Economics, University of Bristol, UK. [Downloadable!]
    Other versions:
  3. Nikas Rudholm, 2001. "Entry and the Number of Firms in the Swedish Pharmaceuticals Market," Review of Industrial Organization, Springer, vol. 19(3), pages 351-364, November. [Downloadable!] (restricted)
  4. Granier, L. & Trinquard, S., 2006. "Pseudo-Generic Products and Mergers in Pharmaceutical Markets," Cahiers du LASER (LASER Working Papers) 2006.18, LASER (Laboratoire de Science Economique de Richter), Faculty of Economics, University of Montpellier 1. [Downloadable!]
  5. 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. [Downloadable!]
  6. Marisa Miraldo, 2007. "Reference Pricing Versus Co-Payment in the Pharmaceutical Industry: Firm's Pricing Strategies," Working Papers 027cherp, Centre for Health Economics, University of York. [Downloadable!]
  7. S. Bhaduri & H. Worch, 2008. "Past Experience, Cognitive Frames, and Entrepreneurship: Some Econometric Evidence from the Indian Pharmaceutical Industry," Papers on Economics and Evolution 2008-04, Max Planck Institute of Economics, Evolutionary Economics Group. [Downloadable!]
  8. James W. Hughes & Michael J. Moore & Edward A. Snyder, 2002. ""Napsterizing" Pharmaceuticals: Access, Innovation, and Consumer Welfare," NBER Working Papers 9229, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  9. Niklas Rudholm, 2003. "Competition and substitutability in the Swedish pharmaceuticals market," Applied Economics, Taylor and Francis Journals, vol. 35(14), pages 1609-1617, September. [Downloadable!] (restricted)
  10. Daunfeldt, Sven-Olov & Rudholm, Niklas, 2006. "Revenues as a Proxy for Profits: A Cautionary Note," HUI Working Papers 5, The Swedish Retail Institute (HUI). [Downloadable!]
    Other versions:
  11. Granier, L. & Trinquard, S., 2007. "Mergers and Barriers to Entry In Pharmaceutical Markets," Cahiers du LASER (LASER Working Papers) 2007.21, LASER (Laboratoire de Science Economique de Richter), Faculty of Economics, University of Montpellier 1. [Downloadable!]
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