David Ridley: How Drug Market Share Varies with Entry Timing and Advertising

Fuqua professor and HSM Faculty Director David Ridley, along with coauthor Stephane Régnier, estimated how a drug’s peak market share depends on its promotional spending, its order of entry into the market, and its time to the market relative to the most recent entrant. They collected data on new drugs approved by the US Food and Drug Administration (FDA) between 1988 and 2009. To control for product quality, they considered only drugs given standard review by the FDA.They found that a 1% increase in promotional spending was associated with a .46% increase in peak market share. Relative to a second entrant, with no change in spending, peak market share was 18% lower for the third entrant and 23% lower for the fourth. These results will help companies and analysts forecast the success of new drugs. Also, these results can be used to estimate the impact that priority review vouchers have on a company’s peak market share.

Read more in “Market Watch: Forcasting market share in the US pharmaceutical market” Nature Reviews Drug Discovery

Regnier, S., & Ridley, D. (2015). Market watch: Forecasting market share in the US pharmaceutical market. Nature Reviews Drug Discovery, 14, 594-595. DOI:10.1038/nrd4697