The impact of drug piracy on drug sales
Authors: Kuei-Kuei Lai; Shih-Chang Hung; Yu-Dih Shih; Chun-Yi Lee;
Journal:Chia Da Management Review. Jun. 2005, 25(2): 141-170.
Keywords:Innovative Pharmaceutical Products; Innovation Diffusion; Drug Piracy; Pharmaceutical Industry
Abstract:
The process of innovation in the pharmaceutical industry is full of uncertainty. It requires not only a great deal of capital and
time for research but also accurate strategy and efforts to commercialize the R&D result. A newly developed and
commercialized medicine is very easy to be duplicated by modem analytical technology into a counterfeit drug, which is
detrimental to both the innovators' operational performance and the users' health. This research is conducted on the basis of
”Diffusion Theory” to explore the process of innovative pharmaceutical product diffusion. This study uses the sale of Viagra
in Taiwan as an example and regards the illegal drug as the other brand and its case to compete, replace and interact with
the originally developed medicine and estimates the impact of the counterfeit drug in the parameter model. This study has
found that ”media” and ”word-of-mouth” are the key factor in the fast Viagra diffusion in the Taiwan pharmaceutical market
while the marketing efforts are the secondary impact factor. In this paper, we also discuss the economic and strategic
meaning of the parameter for the innovator's responding strategies to the counterfeit medicine.