Modelling and Forecasting Branded and Generic Pharmaceutical Life Cycles: Assessment of the Number of Dispensed Units

S. Buxton, Konstantinos Nikolopoulos (), M. Khammash and P. Stern
Additional contact information
S. Buxton: Swansee University
M. Khammash: University of Sussex
P. Stern: University of Exeter

No 15004, Working Papers from Bangor Business School, Prifysgol Bangor University (Cymru / Wales)

Abstract: In this paper, modelling and forecasting pharmaceutical life cycles are investigated, specifically at the time of patent expiry when the generic form of the product could be introduced to the market, while the branded form is still available for prescription. Assessing the number of dispensed units of branded and generic forms of pharmaceuticals is increasingly important due to the irrelatively large market value in the United Kingdom and the limited number of new ÔblockbusterÕ branded drugs. As a result, pharmaceutical companies make every effort to extend the commercial life of their branded products and forecast their sales in the future, while public health institutes seek insights for effective governance as the use of a branded drug, when a generic form is available. In this paper, eleven methods are used to model and forecast drugs life cycles: Bass Diffusion, Repeat Purchase Diffusion Model, Exponential Smoothing, Holt Winters Exponential Smoothing, Moving Averages, ARIMA, Regression over t, Regression over t-1, Robust Regression, Na•ve and Na•ve with drift. The results suggest a difference depending on the forecasting horizon with the ARIMA model and Holt Winters Exponential Smoothing both producing accurate short term forecasts. However for 3-5 year forecasts the results suggest that a very simple forecasting model blended with an addition of a small trend provides the most accurate forecasts for both branded and generic pharmaceuticals

Pages: 38 pages
Date: 2015-04
New Economics Papers: this item is included in nep-for, nep-hea, nep-ipr and nep-pr~
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