EconPapers    
Economics at your fingertips  
 

Entry time effects and follow-on drug competition

Luiz Andrade (), Catherine Sermet () and Sylvain Pichetti ()

The European Journal of Health Economics, 2016, vol. 17, issue 1, 45-60

Abstract: Pharmaceutical firms have been criticized for concentrating efforts of R&D on the so-called me-too or follow-on drugs. There have been many comments for and against the dissemination of these incremental innovations but few papers have broached the subject from an econometric point of view, possibly because identification of me-too or follow-on drugs is not so obvious. This paper focuses on the impact of entry order on follow-on drug competition in the French market between the years 2001 and 2007. More precisely, this study examines the effects on market share of first entrants in the follow-on drug market and how this possible competitive advantage changes over time. First results are coherent with theoretical microeconomic issues concerning the importance of being first. We find evidence that first movers in the follow-on drug market have the ability to capture and maintain greater market share for a long period of time. The hierarchical market position of follow-on drugs does not seem to be affected by generic drug emergence. From a dynamic perspective, our analysis shows that market share is positively correlated with the ability of follow-on drugs to set prices higher than the average follow-on drug prices in a specific therapeutic class, which means that market power remains considerably important for first movers. Moreover, we found that the optimum level of innovation to maximize market share is the highest one. Copyright Springer-Verlag Berlin Heidelberg 2016

Keywords: Incremental innovation; Follow-on drugs; Entry timing; Market share; I11; I18; C5; L65 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2) Track citations by RSS feed

Downloads: (external link)
http://hdl.handle.net/10.1007/s10198-014-0654-9 (text/html)
Access to full text is restricted to subscribers.

Related works:
Working Paper: Entry time effects and follow-on drug competition (2016)
Working Paper: Entry Time Effects and Follow-on Drugs Competition (2012) Downloads
Working Paper: Entry time effects and follow on drug competition (2011)
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:17:y:2016:i:1:p:45-60

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

DOI: 10.1007/s10198-014-0654-9

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 ().

 
Page updated 2022-06-26
Handle: RePEc:spr:eujhec:v:17:y:2016:i:1:p:45-60