IP² Working Paper No. 16002
by Ajay Bhaskarabhatla and Chirantan Chatterjee
Original Date: December 18, 2015
Keywords: First-mover advantage, pharmaceuticals, IPR, India
Scholars argue that the presence of persistent first-mover advantages obviates the need for relatively long-lived patents as incentives for innovations. What then is the impact of the strengthening of patent protection, particularly in developing economies, on non-patent-based first-mover advantages? We investigate this question by estimating the extent of erosion of firstmover advantages in the Indian pharmaceutical industry due to the introduction of a stronger product-patent regime in January 2005. We distinguish between newly created and pre-existing markets, in which the strength of product patent protection differs systematically. Our analyses account for the endogeneity of entry order. We find evidence of erosion—as high as 50-percent—that is robust to alternative estimation strategies and definitions of dependent variables. We extend the Suarez-Lanzolla framework and highlight the role of regulatory factors on the relationship between first-mover advantages and intellectual property rights and discuss managerial and policy implications.
COMPLETE PAPER: First-Mover Advantages Before and After TRIPS: Evidence from the Indian Pharmaceutical Industry
ABSTRACT: First-Mover Advantages Before and After TRIPS: Evidence from the Indian Pharmaceutical Industry