Date of Award

1-1-2011

Document Type

Campus Access Thesis

Department

Moore School of Business

Sub-Department

Economics

First Advisor

Melayne M McInnes

Abstract

The pharmaceutical market has become much more competitive since the Hatch-Waxman Act of 1984, as almost all drugs experience generic entry after patent protection lapses. This paper updates a hypothesis presented in a current paper by Ellison on the existence entry-deterrence motives for strategic investments, specifically product proliferation. Entry deterrence is not possible in large markets and not necessary in small markets, so if investments vary in intermediate markets, then they are motivated by entry deterrence. If a drug manufacturer increased its presentation proliferation before patent expiration only when in markets where entry deterrence is possible, then presentation proliferation is being used in an attempt to deter entry. Presentation proliferation is found to be nonmonotonic with market size in at least one case when considering a concentration of revenues as well as the number of presentations available. However, unlike other strategic investments, the decision to proliferate occurs years before patent expiration. Test results on the timing of presentation proliferation do not indicate the presence of entry deterrence motives.

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