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Product life cycle patterns for pharmaceuticals and their impact on R&D profitability of late mover products

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  • Bauer, Hans H.
  • Fischer, Marc

Abstract

This study describes a cross-sectional and time series analysis of sales data over one decade in four major segments of the market for cardiovascular drugs. We estimate over 200 product life cycles (PLC) using a very flexible mathematical model to account for a variety of PLC shapes. Life cycles are then clustered on the basis of estimated regression coefficients. As a result this analysis leads to the detection of an international PLC classification. Moreover, it turns out that the order of entry is not only crucial to achieve a certain market share level but also to the shape of the drug life cycle and therefore for the long-term economic evaluation of innovative products. The paper provides the initial findings on this subject through a simulation study which is in line with previous research designs and shows the impact of the PLC shape on the net present value (NPV).

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  • Bauer, Hans H. & Fischer, Marc, 2000. "Product life cycle patterns for pharmaceuticals and their impact on R&D profitability of late mover products," International Business Review, Elsevier, vol. 9(6), pages 703-725, December.
    • Handle: RePEc:eee:iburev:v:9:y:2000:i:6:p:703-725
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    Cited by:

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    2. Hassanzadeh, Farhad & Modarres, Mohammad & Nemati, Hamid R. & Amoako-Gyampah, Kwasi, 2014. "A robust R&D project portfolio optimization model for pharmaceutical contract research organizations," International Journal of Production Economics, Elsevier, vol. 158(C), pages 18-27.
    3. Nikolopoulos, Konstantinos & Buxton, Samantha & Khammash, Marwan & Stern, Philip, 2016. "Forecasting branded and generic pharmaceuticals," International Journal of Forecasting, Elsevier, vol. 32(2), pages 344-357.
    4. Ludivine Blanc, 2015. "The European Pharmaceutical Industry in a Global Economy: what drives EU exports of pharmaceuticals?," Bruges European Economic Research Papers 31, European Economic Studies Department, College of Europe.
    5. Marc Fischer & Michel Clement, 2007. "Erfolgsfaktor Internationalisierung: Eine empirische Analyse der Breite und Geschwindigkeit der internationalen Markteinführung pharmazeutischer Innovationen von Folgern," Schmalenbach Journal of Business Research, Springer, vol. 59(7), pages 847-881, November.
    6. Guo, Xuezhen, 2014. "A novel Bass-type model for product life cycle quantification using aggregate market data," International Journal of Production Economics, Elsevier, vol. 158(C), pages 208-216.
    7. Hansen, Klaus Reinholdt Nyhuus & Grunow, Martin, 2015. "Planning operations before market launch for balancing time-to-market and risks in pharmaceutical supply chains," International Journal of Production Economics, Elsevier, vol. 161(C), pages 129-139.
    8. S. Buxton & Kostas Nikolopoulos & M. Khammash & P. Stern, 2015. "Modelling and Forecasting Branded and Generic Pharmaceutical Life Cycles: Assessment of the Number of Dispensed Units," Working Papers 15004, Bangor Business School, Prifysgol Bangor University (Cymru / Wales).
    9. Juram Kim & Changyong Lee, 2017. "Stochastic service life cycle analysis using customer reviews," The Service Industries Journal, Taylor & Francis Journals, vol. 37(5-6), pages 296-316, April.
    10. Wong, Hiu-Kan & Ellis, Paul D., 2007. "Is market orientation affected by the product life cycle?," Journal of World Business, Elsevier, vol. 42(2), pages 145-156, June.

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