Strategic behavior and entry deterrence by branded drug firms: the case of authorized generic drugs

Lu Yao and Mengde Liu ()
Additional contact information
Lu Yao: China Univeristy of Political Science and Law
Mengde Liu: Beijing Institute of Technology

The European Journal of Health Economics, 2025, vol. 26, issue 4, No 3, 575 pages

Abstract: Abstract Pharmaceutical firms that market brand-name drugs lose substantial market share to generic manufacturers after patent expiration. As a response to the threat of generic competition, branded manufacturers pursue defensive strategies. One such strategy is the launch of authorized generic drugs. Authorized generic drugs are produced by branded manufacturers to compete against other generic drug entrants. Such competition may lower the expected profits of generic drug manufacturers and hence deter future generic drug entry. This paper models and empirically examines whether the introduction of authorized generic drugs changes the independent generic firms’ decisions on entering the market. We use an instrumental variable approach to evaluate the effect of authorized generic drugs on the responses of generic manufacturers. The results show that the entry of authorized generic drugs deters and delays the entry of generic drugs.

Keywords: Generic drug; Pharmaceutical industry; Authorized generic drugs; Market competition strategy; Generic entry deterrence; Brand name drugs (search for similar items in EconPapers)
JEL-codes: I10 L10 (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1007/s10198-024-01721-y Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:eujhec:v:26:y:2025:i:4:d:10.1007_s10198-024-01721-y

Ordering information: This journal article can be ordered from
http://www.springer. ... cs/journal/10198/PS2

DOI: 10.1007/s10198-024-01721-y

Access Statistics for this article

The European Journal of Health Economics is currently edited by J.-M.G.v.d. Schulenburg

More articles in The European Journal of Health Economics from Springer, Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ) Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().