Abstract

This paper examines generic entry into the Japanese pharmaceutical market. Relatively little is known about generic entry in regulated markets. Using micro data between 2003 and 2005, I find that generic entry is sensitive to the prescription pattern driven by the price regulation and healthcare system. Fewer generics enter if the drug is more frequently prescribed at large hospitals and at medical institutions where prescribing and dispensing are separated. Economies of scope in entering multiple markets also affect entry decisions. Brand revenues, which are an important determinant in unregulated markets, also explain generic entry in the regulated market.

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