Logo eprints

Dynamic competition in pharmaceuticals: Patent expiry, generic penetration, and industry structure

Pammolli, Fabio and Magazzini, Laura and Riccaboni, Massimo Dynamic competition in pharmaceuticals: Patent expiry, generic penetration, and industry structure. The European Journal of Health Economics, 5 (2). pp. 175-182. ISSN 1618-7598 (2004)

Full text not available from this repository.


This paper investigates patterns of industrial dynamics and competition in the pharmaceutical industry, with particular reference to the consequences of patent expiry in different countries. We focus on the competition at the level of single chemical entities, distinguishing between original brands and generic products. Quarterly data, spanning from July 1987 to December 1998, on sales of pharmaceutical products in four countries (USA, UK, Germany, and France) constitute the basis of our analysis. All the products containing major molecules whose patent expiration date lies between 1986 and 1996 are included in our sample. We show how diffusion of generics is linked to the characteristics of the market and investigate how price dynamics of original products are affected by generic competition. Our empirical investigation shows that the dynamics of drug prices and the competition by generic drugs vary significantly across countries. This heterogeneity notwithstanding, a clear distinction seems to emerge. On the one hand, systems that rely on market-based competition in pharmaceuticals promote a clear distinction between firms that act as innovators and firms that act as imitators after patent expiry. Here, original products enjoy premium prices and exclusivity profits under patent protection, and face fierce price competition after patent expiry. On the other hand, in systems that rely on administered prices, penetration by generic drugs tends to be rather limited. Its descriptive and preliminary nature notwithstanding, our analysis seems to have relevant implications at different levels of generality, especially for Europe.

Item Type: Article
Identification Number: 10.1007/s10198-003-0218-x
Uncontrolled Keywords: Pharmaceuticals - Patent expiration
Subjects: H Social Sciences > HB Economic Theory
H Social Sciences > HD Industries. Land use. Labor
R Medicine > RA Public aspects of medicine
R Medicine > RM Therapeutics. Pharmacology
T Technology > T Technology (General) > T201 Patents. Trademarks
Research Area: Economics and Institutional Change
Depositing User: Users 2 not found.
Date Deposited: 30 Jun 2011 14:25
Last Modified: 31 Aug 2011 14:40
URI: http://eprints.imtlucca.it/id/eprint/651

Actions (login required)

Edit Item Edit Item