Healthy Skepticism Library item: 3552

Warning: This library includes all items relevant to health product marketing that we are aware of regardless of quality. Often we do not agree with all or part of the contents.

Publication type: Journal Article

Hurwitz MA, Caves RE.
Persuasion or information? Promotion and the shares of brand name and generic pharmaceuticals
Journal of Law and Economics 1988; 31:299-320

Abstract:

Sales promotion outlays for new pharmaceuticals both convey information and seek rents for their innovators. This study attempts to weigh the balance of these factors by examining the markets for drug products whose patents have expired, bringing their innovators into competition with entrants offering the same drug under its generic name. The finding is that the trademark holders’ sales promotion outlays do preserve their shares against incursion by generic entrants. This effect is independent of the preservative effect of goodwill stocks built up during the period when the innovative drug was marketed exclusively on patent. The evidence is consistent with a “persuasive” role for innovators’ promotion outlays both in building up the goodwill stock under patent and preserving loyalty afterward. But of course it does not deny an important informative fucntion in the promotion of new drugs.

Keywords:
*mathematical modeling/United States/market share/ competitive consequences of promotion/ generics/INFLUENCE OF PROMOTION: MARKET SHARE