Entry Decisions in the Generic Pharmaceutical Industry

Posted: 16 Jun 1999

See all articles by Fiona M. Scott Morton

Fiona M. Scott Morton

Yale School of Management; National Bureau of Economic Research (NBER)

Multiple version iconThere are 3 versions of this paper

Abstract

Data on all generic drug entries in the period 1984-1994 are used to estimate which markets heterogeneous potential entrants will decide to enter. I find that organizational experience predicts entry. Firms tend to enter markets with supply and demand characteristics similar to the firm's existing drugs. Larger revenue markets, markets with more hospital sales, and products that treat chronic conditions attract more entry. The simultaneous nature of entry leads to an additional interpretation: specialization is profitable because of the severe risk to profits when a market is "overentered." However, I am unable to make any conclusions about the efficiency of entry decisions.

JEL Classification: L0, L81

Suggested Citation

Scott Morton, Fiona M., Entry Decisions in the Generic Pharmaceutical Industry. Available at SSRN: https://ssrn.com/abstract=164431

Fiona M. Scott Morton (Contact Author)

Yale School of Management ( email )

493 College St
New Haven, CT CT 06520
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Do you have negative results from your research you’d like to share?

Paper statistics

Abstract Views
2,965
PlumX Metrics