The challenge of patent expiry: A case study of pharmaceutical industry

Abstract

This paper investigates patterns of industrial dynamics and competition in the pharmaceutical industry, with particular reference to the consequences of patent expiry in different countries though out the world. The main focus is on the competition at the level of single chemical entities, distinguishing between original brands and generic products. All the products containing major molecules whose patent expiration date lies between 2013 to 2021 are included in our sample. This study shows that how challenging is the task of meeting the global competition at the expiration of patent rights and furthermore what losses the pharmaceutical companies can bear after wards. This empirical investigation shows that the dynamics of drug R&D and its ultimate effect on the prices, especially generics, varies a lot. This kind of phenomena drastically hurts the investment made by the pharmaceutical companies.