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The relative impact of actual and potential rivalry on firm profitability in the pharmaceutical industry
Author(s) -
Cool Karel,
Röller LarsHendrik,
Leleux Benoit
Publication year - 1999
Publication title -
strategic management journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 11.035
H-Index - 286
eISSN - 1097-0266
pISSN - 0143-2095
DOI - 10.1002/(sici)1097-0266(199901)20:1<1::aid-smj995>3.0.co;2-x
Subject(s) - rivalry , profitability index , competition (biology) , business , pharmaceutical industry , industrial organization , economics , monetary economics , finance , microeconomics , microbiology and biotechnology , ecology , biology
This paper estimates the effects of actual and potential rivalry on profitability of firms in the U.S. pharmaceutical industry during the 20‐year period 1963–82. The results show that during the 1960s actual rivalry among the sampled firms did not materially affect firm profitability, but that during the 1970s competition among incumbents had an increasingly adverse effect on their profitability. The results also show that potential competition significantly reduced drug firms’ profitability during the entire 20‐year period. Copyright © 1999 John Wiley & Sons, Ltd.