ERIM Research Clinic: International Launch and Adoption of New Pharmaceuticals

Innovation is one of the primary engines of economic growth and societal welfare. While, in the current globalization context, firms increasingly launch new products on a global scale, cross-national inequalities in access to innovations constitute a major public policy concern and a challenge for international firms. Prior literature in marketing has studied cross-national differences in the growth pattern of new consumer durables, either in sales, penetration or adoption. When one aims to model sales growth of new prescription drugs, this literature shows three important shortcomings: (1) the sources of country variation typically used are economics and national culture, while regulation is always omitted; (2) the effects of country characteristics are assumed to have a constant effect over time on the growth pattern, while this is very likely not the case; (3) the sales growth of prescription drugs may show different patterns from durables and be affected differently by economic and cultural characteristics of nations. We study the sales evolution of 15 new molecules, across 4 therapeutic categories, and 53 countries, during their first 84 months. On this data, we estimate a time-varying coefficient model, to test our theoretical expectations, using penalized splines. We explore the time-varying effects of economic wealth, national culture and regulation on this sales growth process. Our findings may be used as input by managers for international launch and sales decisions. They may also be used by public policy administrators to compare drug sales in their country to other countries and to assess the role of regulatory regimes therein.