Research Summary
Research Summary
Marketing and Competition in Pharmaceutical Markets
Description
In his research on pharmaceutical markets, Professor King explores how marketing and product differentiation affect competition among firms in the prescription market for anti-ulcer drugs. Four main results emerge from an analysis of antiulcer drug sales from 1977 to 1993. Observed drug characteristics became less important relative to marketing in determining demand. Total marketing by all firms reduced product differentiation and raised the cost of entry significantly. Although increasingly rivalrous, marketing expanded the market, increasing social welfare. Finally, estimated returns to eliminating one adverse drug interaction in the pioneer drug approximately equal its first two years of sales.