Does Increased Price Competition Affect Entry of New Pharmaceutical Products?∗

In October 2002 a substitution reform was introduced in the Swedish Pharmaceuticals market. In this note, the effects of increased price com-petition due to the reform on the entry of new pharmaceutical products were studied. The results show that the reform did affect the entry be-havior of generic manufacturers as they became more prone to enter new package sizes into the market after the reform, but also that there is considerable heterogeneity in entry behavior between different ATC-code groups for both brand name and generic products