Product Differentiation, Competition and Regulation of New Drugs: The Case of Statins in Four European Countries

摘要

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.