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The importance of being first: evidence from Canadian generic pharmaceuticals

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  • Aidan Hollis

Abstract

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.

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  • Aidan Hollis, 2002. "The importance of being first: evidence from Canadian generic pharmaceuticals," Health Economics, John Wiley & Sons, Ltd., vol. 11(8), pages 723-734, December.
    • Handle: RePEc:wly:hlthec:v:11:y:2002:i:8:p:723-734
    DOI: 10.1002/hec.698
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    References listed on IDEAS

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    Cited by:

    1. Aljoscha Janssen, 2022. "Price dynamics of Swedish pharmaceuticals," Quantitative Marketing and Economics (QME), Springer, vol. 20(4), pages 313-351, December.
    2. Laurent Granier & S颡stien Trinquard, 2012. "Predation in off-patent drug markets," Applied Economics, Taylor & Francis Journals, vol. 44(17), pages 2171-2186, June.
    3. Tommaso M. Valletti & Stefan Szymanski, 2006. "Parallel Trade, International Exhaustion And Intellectual Property Rights: A Welfare Analysis," Journal of Industrial Economics, Wiley Blackwell, vol. 54(4), pages 499-526, December.
    4. Roger Feldman & Félix Lobo, 2013. "Competition in prescription drug markets: the roles of trademarks, advertising, and generic names," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 14(4), pages 667-675, August.
    5. Vasco Rodrigues & Ricardo Gonçalves & Hélder Vasconcelos, 2014. "Anti-Competitive Impact of Pseudo-Generics," Journal of Industry, Competition and Trade, Springer, vol. 14(1), pages 83-98, March.
    6. Aidan Hollis, 2003. "The Anti-Competitive Effects of Brand-Controlled "Pseudo- Generics" in the Canadian Pharmaceutical Market," Canadian Public Policy, University of Toronto Press, vol. 29(1), pages 21-31, March.
    7. Saradindu Bhaduri & Thomas Brenner, 2011. "Determinants of drug launch delay in pre-TRIPS India: A survival analysis approach," Working Papers on Innovation and Space 2011-05, Philipps University Marburg, Department of Geography.
    8. Appelt, Silvia, 2010. "Authorized Generic Entry prior to Patent Expiry: Reassessing Incentives for Independent Generic Entry," Discussion Papers in Economics 11476, University of Munich, Department of Economics.
    9. Aidan Hollis, 2005. "How do Brands’ “Own Generics” Affect Pharmaceutical Prices?," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 27(4), pages 329-350, December.
    10. Sotiris Vandoros, 2014. "Therapeutic Substitution Post‐Patent Expiry: The Cases Of Ace Inhibitors And Proton Pump Inhibitors," Health Economics, John Wiley & Sons, Ltd., vol. 23(5), pages 621-630, May.
    11. Paul Grootendorst, 2007. "Effects of 'Authorized-Generics' on Canadian Drug Prices," Social and Economic Dimensions of an Aging Population Research Papers 201, McMaster University.
    12. Luiz Andrade & Catherine Sermet & Sylvain Pichetti, 2016. "Entry time effects and follow-on drug competition," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 17(1), pages 45-60, January.
    13. Laurent Granier & Sébastien Trinquard, 2011. "Predation in Off-Patent Drug Markets," Post-Print hal-00687806, HAL.
    14. Patricia M. Danzon & Eric L. Keuffel, 2014. "Regulation of the Pharmaceutical-Biotechnology Industry," NBER Chapters, in: Economic Regulation and Its Reform: What Have We Learned?, pages 407-484, National Bureau of Economic Research, Inc.
    15. Santiago, Fernando & Alcorta, Ludovico, 2012. "Human resource management for learning through knowledge exploitation and knowledge exploration: Pharmaceuticals in Mexico," Structural Change and Economic Dynamics, Elsevier, vol. 23(4), pages 530-546.
    16. Farasat A. S. Bokhari & Franco Mariuzzo & Arnold Polanski, 2020. "Entry limiting agreements: First‐mover advantage, authorized generics, and pay‐for‐delay deals," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 29(3), pages 516-542, July.
    17. Janssen, Aljoscha, 2020. "Price Dynamics of Swedish Pharmaceuticals," Working Paper Series 1325, Research Institute of Industrial Economics.
    18. Ricardo Gonçalves & Vasco Rodrigues & Hélder Vasconcelos, 2015. "Reference pricing in the presence of pseudo-generics," International Journal of Health Economics and Management, Springer, vol. 15(3), pages 281-305, September.
    19. Ivan Moreno-Torres, 2011. "Generic drugs in Spain: price competition vs. moral hazard," Working Papers XREAP2011-04, Xarxa de Referència en Economia Aplicada (XREAP), revised May 2011.
    20. Saradindu Bhaduri & Thomas Brenner, 2013. "Examining the determinants of drug launch delay in pre-TRIPS India," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 14(5), pages 761-773, October.
    21. Granlund, David & Sundström, David, 2018. "Physicians prescribing originals causes welfare losses," Economics Letters, Elsevier, vol. 170(C), pages 143-146.

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