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The importance of being first: evidence from Canadian generic pharmaceuticals
Author(s) -
Hollis Aidan
Publication year - 2002
Publication title -
health economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.55
H-Index - 109
eISSN - 1099-1050
pISSN - 1057-9230
DOI - 10.1002/hec.698
Subject(s) - competitor analysis , market share , generic drug , business , drug industry , drug approval , industrial organization , economics , marketing , public economics , drug , medicine , pharmacology , engineering , engineering ethics
This paper uses pooled cross‐section data on Canadian ethical drug sales to examine the effect of entry timing on sales of generic drugs. The data is for all drugs for which the first generic competitor entered during the years 1994–1997. It is found that the first generic entrant has a lasting competitive advantage: being first into the market appears to lead to an increase of around 30% in market share (among generics) over a period of at least 4 years. This finding has considerable implications for the current policy of allowing brandname drug companies to issue pseudo‐generic equivalents as a preemptive strike against true generic competitors. Copyright © 2002 John Wiley & Sons, Ltd.