Drug Firms Research Articles

Strategic behavior and entry deterrence by branded drug firms: the case of authorized generic drugs.

Pharmaceutical firms that market brand-name drugs lose substantial market share to generic manufacturers after patent expiration. As a response to the threat of generic competition, branded manufacturers pursue defensive strategies. One such strategy is the launch of authorized generic drugs. Authorized generic drugs are produced by branded manufacturers to compete against other generic drug entrants. Such competition may lower the expected profits of generic drug manufacturers and hence deter future generic drug entry. This paper models and empirically examines whether the introduction of authorized generic drugs changes the independent generic firms' decisions on entering the market. We use an instrumental variable approach to evaluate the effect of authorized generic drugs on the responses of generic manufacturers. The results show that the entry of authorized generic drugs deters and delays the entry of generic drugs.

The cost of influence: How gifts to physicians shape prescriptions and drug costs

This paper investigates the influence of gifts – monetary and in-kind payments – from drug firms to US physicians on prescription behavior and drug costs. Using causal models and machine learning, we estimate physicians’ heterogeneous responses to payments on antidiabetic prescriptions. We find that payments lead to increased prescription of brand drugs, resulting in a cost rise of $23 per dollar value of transfer received. Paid physicians show higher responses when they treat higher proportions of patients receiving a government-funded low-income subsidy that lowers out-of-pocket drug costs. We estimate that introducing a national gift ban would reduce diabetes drug costs by 2%.

Informed options trading before FDA drug advisory meetings

Months before the Food and Drug Administration (FDA) decides to approve or reject a new drug, it often asks committees of drug experts for their recommendations. The experts receive nonpublic technical reports from drug firms and FDA staff. We find significant abnormal options trading before the final reports are created and the committees meet, particularly for small drug firms. These options trades appear to be informed because there are more calls (puts) purchased before approvals (rejections), and a majority have maturities covering the dates when the reports are publicly released. Our results imply that securities regulators should consider monitoring trades early, well before FDA drug approval decisions.

The deleveraging puzzle of investment opportunity shock: A quasi-natural experiments on drug marketing authorization holder

Investment opportunity shocks may either force firms to reduce financial leverage to alleviate external debt constraints and maintain a flexible financial structure, or increase financial leverage due to the need to send positive signals to the market. We analyze this deleveraging puzzle using the reform of the Drug Marketing Authorization Holder (DMAH) in China as an exogenous shock. We find that DMAH has a deleveraging effect on drug firms, and that the agency cost and the market competition are the two key paths through which DMAH affects firms' financial leverage. Further tests show that the deleveraging effect mainly exists in non-SOEs, firms with higher financing constraints and stronger R&D willingness. Finally, drug firms have a better future performance by reducing their financial leverage. This paper provides insights for understanding corporate capital structure decisions under investment opportunity shocks.

'A global outlier': how drug firms are fighting back against UK tax increases

'A global outlier': how drug firms are fighting back against UK tax increases

Digital Transformation In Biotech: The Competitive Advantage In Biotech Companies

Digital transformation in biotech is the competitive advantage in the biotech industry. It has made life easier for them and their customers, bringing efficiency to all levels of the company and collecting data, product quality, and predictability to all sectors of life. It’s been argued over many years that a lack of vision led to a lack of competitiveness in this industry. The old ways were bearing fruit; these days gone by, there is a need for new strategies where large pharmaceutical companies are struggling with their market share going down while small biotech firms are growing exponentially. The future is data and digital transformation. Digital transformation in biotech is a massive trend that has affected the lives of all humans. Even though, it’s a new concept in this industry, that has no official definition yet. Hence, it’s been heavily debated over many years by many scholars and companies on how to define digital transformation in biotech. Digital technologies are changing the way we work and interact with. Digitization of the pharmaceutical industry is one of the biggest challenges for drug firms, who have to deal with the onslaught of pressures from cost-conscious consumers who, along with lawmakers, are chasing incontrovertible evidence of benefits from drug side effects and cost savings from data-driven healthcare.

EVALUATING THE HATCH-WAXMAN AMENDMENT’S INFLUENCE ON FDA'S GENERIC MEDICATION APPROVAL PROCESS

Generics are drugs marketed by their chemical names, not brand names or chemical compositions. Generic drugs are less expensive. The United States Food and Drug Administration (USFDA) allows generic drugs when patents expire or owners renounce their rights. Competition lowers drug prices once generics are accessible. The Food and Drug Administration monitors the drug business. The Senate confirms the Food and Drug Administration Commissioner's nomination. Food and medications are controlled less than lasers, cell phones, and condoms. The Food & Drug Administration designated 1938–1962 medications as "pioneer goods. Kefauver-Harris requires all drug firms to submit accelerated applications (Abbreviated New Drug Application). Medicaid and Medicare modifications to the Social Security Act popularised generic medications. The 1984 law accelerated the launch of generic pharmaceuticals law and boosted generic drug introduction. The 1992 Generic Medication Enforcement Act combats fraud and misuse. The 1984 law accelerated the launch of generic pharmaceuticals.

No Free Launch: At-Risk Entry by Generic Drug Firms

After receiving FDA approval, a generic drug manufacturer can launch ‘at risk’ before any patent infringement litigation concludes, but it risks paying damages if it ultimately loses the litigation. A generic can eliminate the risk by waiting to launch until after the appeals process is complete but waiting has downsides too. We examine FDA approvals of generic drug applications with ‘first-filer’ status (which precludes other generics from entering beforehand) to examine empirical patterns of at-risk entry. In our data, litigants usually settled prior to a legal decision. For the remainder, drugs that received FDA approval prior to a favorable district court decision were always launched at risk. Generics without FDA approval before a favorable district court decision launched upon approval unless the approval was close in time to the appeal decision, or it had forfeited the first-filer exclusivity (indicating a low cost of waiting).

Drug firms invest in malaria and neglected tropical diseases

Drug firms invest in malaria and neglected tropical diseases

Targeted protein drug firms advance

Targeted protein drug firms advance

Targeted protein drug firms announce partnerships, new leadership

Targeted protein drug firms announce partnerships, new leadership

Drug firms invest in malaria and neglected tropical diseases

Drug firms invest in malaria and neglected tropical diseases

Strategic Analysis of Opportunities and Risks for New Zealand Drug Firms

Firms have ambitions that they will grow and become a global entity with high returns. Several New Zealand companies such as Merck & Co., Novartis and Roche have been successful whereas others have tried and not succeeded for different reasons. There are usually several factors to put under consideration and many crossroads on the road to success of becoming a profitable multinational company. Whichever way a company decides to follow, clear strategies are usually paramount. This paper presents a comparative analysis of the opportunities and risks of expanding to either China or Africa. The paper an analysis the opportunities and risks that New Zealand drug firms looks into in its aspiration to expand its market base after sales recorded indicated a stall. For sustainability, New Zealand drug firms looks into expanding its products to either China or Africa, which are foreign markets. The paper further outlines on the factors that favor market entry into the foreign market and makes a justification for the preferred choice. Keywords: Strategic Analysis, Opportunities and Risks, China, Africa & New Zealand Drug firms.

Sterling targets low-cost COVID-19 therapy

The drug services firm Sterling Pharma Solutions and the Manchester Institute of Biotechnology (MIB) plan to scale up a low-cost route to molnupiravir, a Merck & Co. antiviral recently approved in the UK to treat COVID-19. The route, developed by MIB with funding from the Bill and Melinda Gates Foundation, uses a novel enzyme, cytidine aminotransferase, which is expected to lower production costs. At its site in Dudley, England, Sterling plans to produce multikilogram quantities of molnupiravir for generic drug firms that will make pills for low-income countries.

GSK and Novo Nordisk invest in RNAi

A decade ago , drug firms were becoming disenchanted with RNA interference (RNAi) technology, which uses small interfering RNA (siRNA) molecules to turn down the expression of disease-causing genes. But the RNAi company Alnylam Pharmaceuticals has launched three commercial siRNA therapies in the past 3 years, and companies are investing in the genetic technology once again. GlaxoSmithKline has signed an agreement with the RNAi company Arrowhead Pharmaceuticals to develop an siRNA therapy for nonalcoholic steatohepatitis (NASH), a form of fatty liver disease. The therapy, currently in a Phase 1/2 clinical trial, targets a gene, HSD17B13 , that encodes an enzyme linked to inflammation in NASH. GSK will pay Arrowhead $120 million initially and up to $910 million in milestone payments. And Novo Nordisk will acquire the RNAi company Dicerna Pharmaceuticals for $3.3 billion . The two firms began collaborating in 2019 on siRNAs that target more than 30 genes in

Cost-Effectiveness Analysis of Branded Drugs With Market Demand and Insurance

ObjectivesCost-effectiveness analysis of branded pharmaceuticals presumes that both cost (or price) and marginal effectiveness levels are exogenous. This assumption underlies most judgments of the cost-effectiveness of specific drugs. In this study, we show the theoretical implications of letting both factors be endogenous by modeling pharmaceutical price setting with and without health insurance, along with patient response to the prices that depend on marginal effectiveness. We then explore the implications of these models for cost-effectiveness ratios. MethodsWe used simple textbook models of patient demand and pricing behavior of drug firms to predict market equilibria in the drug and insurance markets and to generate calculations of the cost-effectiveness ratios in those settings. ResultsWe found that ratios in market settings can be much different from those calculated in cost-effectiveness studies based on exogenous prices and treatment of all patients at risk rather than those who would demand treatment in a market setting. We also found that there may be considerable similarity in these market cost-effectiveness ratios across different products because drug firms with market power set profit-maximizing prices. ConclusionsWe found that market cost-effectiveness ratios will always indicate an excess of benefits over cost. Insurance will lead to less favorable ratios than without insurance, but when insurers bargain with drug firms, rather than taking their prices as given, cost-effectiveness ratios will be more favorable.

Perverse Results from Pharmaceutical Patents in the United States.

In the United States, pharmaceutical patents have had a number of perverse and anticompetitive effects on the development and marketing of prescription drugs. Although some of these effects are unique to the United States, others have implications for patent policy across the world. Among the negative effects of drug patents are: (1) examples of misguided, anti-social, and anticompetitive promotion of patented drugs; (2) misguided incentives that push drug firms toward too much or too little research and development in critical areas: and (3) cartel-facilitating conduct linked to patent licenses or settlements of litigation involving drug patents. Some of these issues can be addressed directly through reforms in patent and competition law policy. There is, however, a need for a broader study of the role of patents in promoting drug research. That study should consider alternatives to the patent system, such as a prize system structured to supplement or partially replace patent rewards for pharmaceutical R&D.

Informed Options Trading Before Fda Drug Advisory Committee Meetings

The Food and Drug Administration uses committees of experts to evaluate potential new drugs. Weeks before they meet, the experts receive nonpublic reports from drug firms and FDA staff. We find significant abnormal options trading before meeting dates and report creation dates, particularly for small firms. Abnormal volume significantly predicts post-meeting stock returns. Informed traders prefer out-of-the-money options, and choose maturities to cover the dates when reports are publicly released. They prefer to sell options close to the meeting date, perhaps to capture returns from both expected stock price changes and the sharp drop in implied volatility following the meetings.

Drug firms’ payments and physicians’ prescribing behavior in Medicare Part D

In a pervasive but controversial practice, drug firms frequently make monetary or in-kind payments to physicians in the course of promoting prescription drugs. We use a federal database on the universe of such payments between 2013 and 2015 linked to prescribing behavior in Medicare Part D. We account for the targeting of payments with fixed effects for each physician-drug combination. In an event study, we show that physicians increase prescribing of drugs for which they receive payments in the months just after payment receipt, with no evidence of differential trends between paid and unpaid physicians prior to the payment. Next, we examine five case studies of major drugs going off patent. Physicians receiving payments from the firms experiencing the patent expiry transition their patients just as quickly to generics as physicians who do not receive such payments. In addition, using hand-collected efficacy data on three major therapeutic classes, we show that drug quality is largely unaffected by the receipt of payments.

IL-2 treatment can be dangerous. Here’s how drug firms are trying to fix it

IL-2 treatment can be dangerous. Here’s how drug firms are trying to fix it