The Synergic Impact of Promotion Intensity and Therapeutic Novelty on Market Performance of Prescription Drug Products

Abstract

Multiple regression analysis was conducted to study the relationships among promotion intensity, product differentiation based on therapeutic novelty, and sales performance measured in relative market share. Especially, synergic effects of promotion intensity and therapeutic novelty on relative market share were examined. Selected as study drugs were new chemical entity drug products introduced in the United States from 1 January 1973 through 31 December 1982, which were classified into 47 different therapeutic classes. The data were obtained for the six-year period 1983 through 1988. The first multiple regression model was constructed in which relative market share was regressed on promotion and therapeutic novelty. The model explained 20.8% of the total variance. Both promotion and therapeutic novelty had significant, positive main effects on relative market share. The second model included the interaction term of promotion and therapeutic novelty, and explained 21.7% of the total variance. The interaction term was significantly positive, which suggested the synergism between promotion and therapeutic novelty.