Predation in Off-Patent Drug Markets

Laurent Granier and Sébastien Trinquart ()
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Sébastien Trinquart: UNOCAM, Paris, France

No 1027, Working Papers from Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon

Abstract: In 2009, Sanofi-Aventis, whose generic subsidiary is Winthrop, merges with the generic firm, Zentiva. This paper fills the gap in the theoretical literature concerning mergers in pharmaceutical markets. To prevent generic firms from increasing their market share, some brand-name firms produce generics themselves, called pseudo- generics. We develop a Cournot duopoly model by considering the pseudo-generics production as a mergers’ catalyst. We show that a brand-name company always has an incentive to purchase its competitor. The key insight of this paper is that the brand-name laboratory can increase its merger gain by producing pseudo-generics beforehand. In some cases, pseudo-generics would not otherwise be produced and this production is then a predatory strategy.

Keywords: Mergers; Pharmaceutical Market; Predation; Pseudo-Generics (search for similar items in EconPapers)
JEL-codes: I11 L12 (search for similar items in EconPapers)
Pages: 49 pages
Date: 2010
New Economics Papers: this item is included in nep-com, nep-ipr and nep-pr~
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ftp://ftp.gate.cnrs.fr/RePEc/2010/1027.pdf (application/pdf)

Related works:
Journal Article: Predation in off-patent drug markets (2012)
Working Paper: Predation in Off-Patent Drug Markets (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:gat:wpaper:1027

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