Product differentiation, competition and regulation of new drugs: the case of statins in four European countries
Article first published online: 17 AUG 2007
Copyright © 2007 John Wiley & Sons, Ltd.
Managerial and Decision Economics
Special Issue: Economic and Policy Issues in the Pharmaceutical Industry
Volume 28, Issue 4-5, pages 455–465, June - August 2007
How to Cite
Kanavos, P., Font, J. C. and McGuire, A. (2007), Product differentiation, competition and regulation of new drugs: the case of statins in four European countries. Manage. Decis. Econ., 28: 455–465. doi: 10.1002/mde.1354
- Issue published online: 17 AUG 2007
- Article first published online: 17 AUG 2007
- Merck Foundation
This paper examines the determinants of competition in the statins market across four European countries over the 1991–2002 period. Using IMS data from the UK, Germany, France and the Netherlands, the paper analyses the potential existence of competition between branded statins prior to patent expiry. Against a conceptual background of Cournot type quantity competition with product differentiation a demand function is estimated using panel data analysis for the first and second entrants on the market. The results indicate substitutability across the initial market entrants and the subsequent entrant only. This is consistent with potential price sensitivity in the branded market for statins, even when the overall size of market is growing. The results are indicative due to empirical issues surrounding endogeniety of the price variable. Copyright © 2007 John Wiley & Sons, Ltd.