First-Mover Advantages Before and After TRIPS: Evidence from the Indian Pharmaceutical Industry

32 Pages Posted: 30 Sep 2012 Last revised: 19 Jun 2014

See all articles by Ajay Bhaskarabhatla

Ajay Bhaskarabhatla

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE); Erasmus Research Institute of Management

Chirantan Chatterjee

SPRU-Sussex, U-Sussex Business School; Hoover Institution, Stanford University

Date Written: September 30, 2012

Abstract

Scholars argue that the presence of persistent first-mover advantages obviates the need for relatively long-lived patents as incentives for innovations. What then is the impact of the strengthening of patent protection, particularly in developing economies, on non-patent-based first-mover advantages? We investigate this question by estimating the extent of erosion of first-mover advantages in the Indian pharmaceutical industry due to the introduction of a stronger product-patent regime in January 2005. We distinguish between newly created and pre-existing markets, in which the strength of product patent protection differs systematically. Our analyses account for the endogeneity of entry order. We find evidence of erosion — as high as 50-percent — that is robust to alternative estimation strategies and definitions of dependent variables. We extend the Suarez-Lanzolla framework and highlight the role of regulatory factors on the relationship between first-mover advantages and intellectual property rights. We conclude by discussing managerial and policy implications.

Keywords: first-mover advantage, pharmaceuticals, TRIPS, India

JEL Classification: O31, O34, O38, L65

Suggested Citation

Bhaskarabhatla, Ajay and Chatterjee, Chirantan, First-Mover Advantages Before and After TRIPS: Evidence from the Indian Pharmaceutical Industry (September 30, 2012). Available at SSRN: https://ssrn.com/abstract=2154510 or http://dx.doi.org/10.2139/ssrn.2154510

Ajay Bhaskarabhatla (Contact Author)

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE) ( email )

P.O. Box 1738
3000 DR Rotterdam, NL 3062 PA
Netherlands
+31 10 408 1004 (Phone)

HOME PAGE: http://people.few.eur.nl/bhaskarabhatla/

Erasmus Research Institute of Management ( email )

P.O. Box 1738
3000 DR Rotterdam
Netherlands
+31 10 408 1004 (Phone)

HOME PAGE: http://www.erim.eur.nl/people/ajay-bhaskarabhatla/

Chirantan Chatterjee

SPRU-Sussex, U-Sussex Business School ( email )

Brighton, BN1 9SL
United Kingdom

HOME PAGE: http://https://profiles.sussex.ac.uk/p535606-chirantan-chatterjee

Hoover Institution, Stanford University ( email )

Stanford, CA 94305
United States

HOME PAGE: http://https://www.hoover.org/profiles/chirantan-chatterjee

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