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

Hans H. Bauer and Marc Fischer

International Business Review, 2000, vol. 9, issue 6, 703-725

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).

Keywords: Product; life; cycle; theory; Cluster; analysis; R&D; profitability; Simulation (search for similar items in EconPapers)
Date: 2000
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