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Do Pharmaceutical Sales Respond to Scientific Evidence?
Author(s) -
Azoulay Pierre
Publication year - 2002
Publication title -
journal of economics and management strategy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.672
H-Index - 68
eISSN - 1530-9134
pISSN - 1058-6407
DOI - 10.1111/j.1430-9134.2002.00551.x
Subject(s) - pharmaceutical industry , marketing , competition (biology) , incentive , product (mathematics) , business , scientific evidence , advertising , function (biology) , medical prescription , affect (linguistics) , industrial organization , economics , microeconomics , medicine , psychology , pharmacology , ecology , philosophy , geometry , mathematics , epistemology , evolutionary biology , biology , communication
I investigate how different sources of information influence the diffusion of pharmaceutical innovations. In prescription‐drug markets, both advertising and scientific information stemming from clinical trials can affect physicians' prescription choices. Using novel indices of clinical‐research output, I find that both marketing and scientific evidence directly influence the diffusion process in the antiulcer‐drug market, with marketing having a more pronounced influence. I also find evidence that clinical outputs are important drivers of firms' marketing efforts, affecting sales indirectly. Taken together, the direct and indirect effects of science on demand imply strong private incentives for clinical research. I conclude that product‐market competition in the pharmaceutical industry is shaped by both advertising rivalries and scientific rivalries. Moreover, drug advertising may perform an important informative function.