A Micro-level Diffusion Model for New Drug Adoption

Journal of Product Innovation Management, Forthcoming

Johnson School Research Paper Series No. 25-2011

31 Pages Posted: 5 Apr 2011 Last revised: 16 Sep 2012

See all articles by Qiang Liu

Qiang Liu

Purdue University - Krannert School of Management

Sachin Gupta

Cornell University - Samuel Curtis Johnson Graduate School of Management

Date Written: March 29, 2011

Abstract

This article proposes a micro-level diffusion model to analyze individual physicians’ adoption of a newly launched prescription drug. The adoption probability is a function of the following factors: physician-oriented marketing activities, patient requests for the new drug, social contagion among physicians, and physician-level characteristics. There are several major findings: (1) Consistent with previous literature, targeted detailing and journal advertising have a positive influence on individual physicians’ adoption of the new drug. Furthermore, the positive effect of meetings & events sponsored by drug manufacturers is captured by this study, an effect that was omitted by previous studies. (2) Patient requests for the new drug are very influential on physicians’ adoption of the new drug. This positive effect of patient requests is new to the extant literature on drug adoption. (3) With a national representative sample, this study demonstrates the existence of contagion effects on physicians’ adoption of the new drug. This complements previous studies based on local markets that found contagion effects. (4) Some key physician-level characteristics, such as prescription volume in the category, are positively related to physicians’ intrinsic propensity to adopt the new drug. In a validation exercise the authors demonstrate that the proposed model performs well in identifying physicians who have a high likelihood of adopting a different new drug early, thereby facilitating targeting of marketing resources.

Suggested Citation

Liu, Qiang and Gupta, Sachin, A Micro-level Diffusion Model for New Drug Adoption (March 29, 2011). Journal of Product Innovation Management, Forthcoming; Johnson School Research Paper Series No. 25-2011. Available at SSRN: https://ssrn.com/abstract=1798572

Qiang Liu (Contact Author)

Purdue University - Krannert School of Management ( email )

1310 Krannert Building
West Lafayette, IN 47907-1310
United States

Sachin Gupta

Cornell University - Samuel Curtis Johnson Graduate School of Management ( email )

Ithaca, NY 14853
United States

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