Forecasting Market Share in the US Pharmaceutical Market
Nature Reviews Drug Discovery. 2015. Vol. 14, No. 9: 594-595
19 Pages Posted: 18 Apr 2016
Date Written: July 31, 2015
Drug development is costly so drug makers need accurate estimates of sales potential. However, sales forecasts are often unreliable. Our study is unique in combining a large sample of drug classes with data on entry order and promotional spending to estimate peak market share while controlling for product quality. We estimate peak market share of 50 drugs (covering 29 different therapeutic classes) from the past two decades based on the promotional spending, entry order, speed-to-market and subsequent market entry of additional competitors. We control for product quality differences by considering only drugs that regulators classified as clinically comparable to other drugs in the class. We find that a product’s peak market share will be about 32% if: i) it is second to the market, ii) it is 2-years delayed relative to the first entrant (of comparable quality to the first entrant), iii) it receives as much promotional spending as the first entrant, and iv) it is followed by a third entrant 1 year later. The results can help managers more accurately forecast sales, and illustrate the value of earlier product launch.
Keywords: Pharmaceuticals; marketing; first-mover advantage
JEL Classification: L65; M3
Suggested Citation: Suggested Citation