Originator and generic medicine: pricing and market share

Abstract

PurposeThe purpose of this paper is to examine the effects of generic medicine competition on the market share growth and pricing of originator brand medicine in the South African private pharmaceutical market.Design/methodology/approachRegression analysis is applied to market share data of originator brand drugs that have been exposed to competition from generic substitutes, based on an agency model of the prescribing physician, the pharmacist or the medical scheme.FindingsThe results indicate that the price of an originator brand medicine relative to the weighted average price of its generics has a significant negative impact on the change of its market share. Investigations into the prices of the originator brands, in relation to the number of generic equivalents in the market, indicate that the number of generics available in a specific market has a significant positive impact on the relative price of originators, thereby making originators relatively more expensive compared to their generic competitors. At the same time, the results show that the absolute price of the originator brand medicines declines as the number of generic equivalents in the market increases.Practical implicationsThe results indicate that, for all modules pooled together, the relative price of the originator product to that of the generic equivalent, is responsible for a significant reduction in the relative change in the market share of the originator medicine. When analysed on the level of anatomical class, or the individual molecule, results are not consistent. For affordable healthcare, the results support the reduction in barriers to entry for generic medicine. Furthermore, the results support education and incentives for doctors, pharmacists and end‐users to develop generic alternatives as trusted brands in their own right.Originality/valueThis study quantitatively assesses the effect that generic medicine competition exerts on the market share of originator medicines in South Africa.

Communication drivers for drug adoption in an uncertain world

“…innovative) brands; otherwise, perceived intention fails to convert into positive prescribing responses. Thus, social influences, both within institutions and outside (in the form of sponsored tours) through commercial communication by firms, plays a central role in drug adoption in emerging markets, as reported in past research (Ladeira et al , 2011; van der Smit-Eon and Bredenkamp, 2013). SCT is used to explain how PBI actually affects actual adoption behaviour, due to social influence (WOM) among doctors.…”

“…The latent factors linked to institutional policies and cultural differences, in an unpredictable market, kept ARB late entrant brand adoption at low level. Contrary to the common beliefs regarding the adoption of affordable medicines (Ladeira et al , 2011; van der Smit-Eon and Bredenkamp, 2013), current communication supply chain create a negative demand for new brands, due to an equilibrium shift of perceived intentions among prescribers. In the light of these results, the analysis of various factors influencing new branded medical prescription in India has proved to be an important issue for marketing studies involving antihypertensive drugs.…”

“…Despite the fact that existing models on perceived adoption intentions mostly consider price sensitivity and advertising effects (Ladeira et al , 2011; Chen and Carroll, 2007; van der Smit-Eon and Bredenkamp, 2013), the impact of communication drivers (Rogers, 2005; Holden and Karsh, 2010) on drug adoption, based on the dimensions of imitation theory (Bass, 1969; Berndt et al , 2003; Bhatia and Wang, 2011) has not yet been explored. Given the mediation effect of adoptees’ experience, communication, under social influence being grounded into the theories like Bandura’s SCT (1986), Fishbein and Ajzen’s (1980) theory of planned behaviour (TPB) and Venkatesh et al ’s (2003) UTAUT theory impacts drug adoption.…”

“…late entrants to the market). The latter face barriers to adoption, as the side effects and efficacy are not well established from a medical point of view and not accepted by patients, mentally or physically (van der Smit-Eon and Bredenkamp, 2013). However, doctors are the decision-makers for drug prescriptions and not the end-consumer patients (Kim and King, 2009), especially in emerging markets (Ladeira et al , 2011).…”

Pseudo-Generics in South Africa: A Price Comparison

“…8 Originator medicines are products that have been designed, developed, tested, and subsequently patented by a company to maximize economic gain, which may result from the availability of a new drug. 9 Patent protection and the sole monopoly of sales for a defined period allows the company to recoup costs incurred during research and development. Generic medicines can be defined as "medicines that contain the same active substances which are identical in strength or concentration, dosage form, and route of administration and meet the same or comparable standards that comply with the requirements for therapeutic equivalence as prescribed."…”