Marketing investment and pharmaceutical product diffusion

Abstract

PurposeThis paper aims to explore the influence of marketing investment on drug diffusion processes, to analyze the heterogeneity of the diffusion characteristics and to understand the drug diffusion patterns in the prescription and over-the-counter (OTC) markets.Design/methodology/approachThe study introduces marketing investment into the Bass model. The authors use the Generalized Bass Model (GBM) to examine the influence of marketing efforts on drug diffusion in Chinese prescription and OTC markets.FindingsThe results of this study suggest that the imitation effect in the prescription drug market is greater than that in the OTC drug market; drug diffusion in the OTC market reaches saturation earlier in the diffusion process. Before reaching the critical state, the effect of marketing investment on drug diffusion in the OTC market is greater than that in the prescription market, and after the critical state, drug diffusion in the prescription market is more sensitive to marketing investment.Originality/valueThe study demonstrates the value of the GBM in empirical analyses of drug diffusion across two distinct markets, and the marketing regulation policies governments adopt have a powerful impact on the speed at which drugs become available in different markets. It enriches the extant product diffusion literature by highlighting the different diffusion patterns of the two segments of pharmaceutical market.