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A dual-market diffusion model for a new prescription pharmaceutical

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  • Vakratsas, Demetrios
  • Kolsarici, Ceren

Abstract

Despite the proliferation of diffusion models and a plethora of applications in many different markets and domains, relatively little research has been conducted on prescription drug diffusion. Yet prescription pharmaceuticals are an increasingly important component of patient care and a critical factor for health economics. Based on clinical management and pharmacoepidemilogical concepts that consider the severity of health problems, and the medical practice of watchful waiting, we propose a dual-market model for the diffusion of new prescription pharmaceuticals. This model distinguishes between an “early” adoption market involving patients with severe health problems, for whom demand is accumulated prior to the pharmaceutical's launch, and a “late” market corresponding to prescriptions for patients with mild problems, which is developed after and potentially triggered by the product's launch. We applied the model to monthly data on new prescriptions and on corresponding marketing activities for a new prescription category, representing the first oral treatment available for the disease. The results suggest that the proposed model has good parameter face and forecasting validity.

Suggested Citation

  • Vakratsas, Demetrios & Kolsarici, Ceren, 2008. "A dual-market diffusion model for a new prescription pharmaceutical," International Journal of Research in Marketing, Elsevier, vol. 25(4), pages 282-293.
    • Handle: RePEc:eee:ijrema:v:25:y:2008:i:4:p:282-293
    DOI: 10.1016/j.ijresmar.2008.05.002
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    Cited by:

    1. Verniers, I.W.J. & Stremersch, S. & Croux, C., 2011. "The Global Entry of New Pharmaceuticals: A Joint Investigation of Launch Window and Price," ERIM Report Series Research in Management ERS-2011-010-MKT, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.
    2. Youseok Lee & Sang-Hoon Kim & Kyoung Cheon Cha, 2023. "The diffusion pattern of new products: evidence from the Korean movie industry," Asian Business & Management, Palgrave Macmillan, vol. 22(5), pages 1830-1847, November.
    3. Goodwin, Paul & Meeran, Sheik & Dyussekeneva, Karima, 2014. "The challenges of pre-launch forecasting of adoption time series for new durable products," International Journal of Forecasting, Elsevier, vol. 30(4), pages 1082-1097.
    4. Verniers, Isabel & Stremersch, Stefan & Croux, Christophe, 2011. "The global entry of new pharmaceuticals: A joint investigation of launch window and price," International Journal of Research in Marketing, Elsevier, vol. 28(4), pages 295-308.
    5. Wenjing Shen & Izak Duenyas & Roman Kapuscinski, 2014. "Optimal Pricing, Production, and Inventory for New Product Diffusion Under Supply Constraints," Manufacturing & Service Operations Management, INFORMS, vol. 16(1), pages 28-45, February.
    6. Ebina, Takeshi & Matsushima, Noriaki & Shimizu, Daisuke, 2015. "Product differentiation and entry timing in a continuous time spatial competition model," European Journal of Operational Research, Elsevier, vol. 247(3), pages 904-913.
    7. Peres, Renana & Muller, Eitan & Mahajan, Vijay, 2010. "Innovation diffusion and new product growth models: A critical review and research directions," International Journal of Research in Marketing, Elsevier, vol. 27(2), pages 91-106.
    8. Katharina Elisabeth Fischer & Tom Stargardt, 2016. "The diffusion of generics after patent expiry in Germany," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 17(8), pages 1027-1040, November.
    9. Fruchter, Gila E. & Van den Bulte, Christophe, 2011. "Why the Generalized Bass Model leads to odd optimal advertising policies," International Journal of Research in Marketing, Elsevier, vol. 28(3), pages 218-230.
    10. Ceren Kolsarici & Demetrios Vakratsas, 2015. "Correcting for Misspecification in Parameter Dynamics to Improve Forecast Accuracy with Adaptively Estimated Models," Management Science, INFORMS, vol. 61(10), pages 2495-2513, October.
    11. Hong, Jungsik & Koo, Hoonyoung & Kim, Taegu, 2016. "Easy, reliable method for mid-term demand forecasting based on the Bass model: A hybrid approach of NLS and OLS," European Journal of Operational Research, Elsevier, vol. 248(2), pages 681-690.
    12. Marie Doumic & Mathieu Mezache & Benoît Perthame & Edouard Ribes & Delphine Salort, 2017. "Strategic Workforce Planning and sales force : a demographic approach to productivity," Working Papers hal-01449812, HAL.
    13. Stremersch, Stefan, 2008. "Health and marketing: The emergence of a new field of research," International Journal of Research in Marketing, Elsevier, vol. 25(4), pages 229-233.

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