Friday, August 12, 2011
Posted by D. Daniel Sokol
Isabel Verniers (Erasmus School of Economics; Faculty of Economics and Business Administration, Ghent University), Stefan Stremersch (Erasmus School of Economics; IESE Business School), and Christophe Croux (Faculty of Business and Economics, Catholic University of Leuven) discuss The Global Entry of New Pharmaceuticals: A Joint Investigation of Launch Window and Price.
ABSTRACT: Research on the launch of new products in the international realm is scarce. The present paper is the first to document how launch window (difference in months between the first worldwide launch and the subsequent launch in a specific country) and launch price are interrelated and how regulation influences both launch window and launch price. The research context is the global 50 countries worldwide launch of 58 new ethical drugs across 29 therapeutic areas. We show that the fastest launch occurs when the launch price is moderately high and the highest launch price occurs at a launch window of 85 months. We find that the health regulator acts strategically in that the extent to which it delays the launch of a new drug increases with the price of the new drug. We also find that regulation overall increases the launch window, except for patent protection. Surprisingly, regulation does not directly impact launch price. The descriptive information on average launch window and launch price and the interconnection between launch window and launch price allows managers in ethical drug companies to build more informed decisions for international market entry. This study also provides public policy analysts with more quantitative evidence regarding launch window and launch price on a broad sample of countries and categories.