Scandinavian Working Papers in Economics

HUI Working Papers,
HUI Research

No 26: Does Increased Price Competition Affect Entry of New Pharmaceutical Products?

David Granlund and Niklas Rudholm
Additional contact information
David Granlund: The Swedish Retail Institute (HUI), Postal: Regeringsgatan 60, 103 29 Stockholm, Sweden, and Department of Economics, Umeå University, SE-901 87 Umeå, Sweden
Niklas Rudholm: The Swedish Retail Institute (HUI), Postal: Regeringsgatan 60, 103 29 Stockholm, Sweden, and Department of Economics, Dalarna University, SE-781 88 Borlänge, Sweden

Abstract: In October 2002 a substitution reform was introduced in the Swedish Pharmaceuticals market. In this note, the effects of increased price competition due to the reform on the entry of new pharmaceutical products were studied. The results show that the reform did affect the entry behavior of generic manufacturers as they became more prone to enter new package sizes into the market after the reform, but also that there is considerable heterogeneity in entry behavior between different ATC-code groups for both brand name and generic products.

Keywords: pharmaceutical industry; generic competition; generic drugs; brand name drugs

JEL-codes: D80; D83; I11; L65

11 pages, November 1, 2009

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