Predation in Off-Patent Drug Markets

Laurent Granier and Sébastien Trinquard
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Sébastien Trinquard: UNOCAM - Union nationale des organismes d'assurance maladie complémentaire - UNOCAM

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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)
Date: 2012
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00537018v1
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Citations: View citations in EconPapers (2)

Published in Applied Economics, 2012, 44 (17), pp. 2171-2186. ⟨10.1080/00036846.2011.562169⟩

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Working Paper: Predation in Off-Patent Drug Markets (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-00537018

DOI: 10.1080/00036846.2011.562169

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