Entry, market structure and innovation in a history-friendly model of the evolution of the pharmaceutical industry

This paper explores a simulation model of the evolution of the pharmaceutical industry, focusing on the factors that influence entry and survival. Indeed, one major puzzle in the interpretation of the history of pharmaceuticals concerns why entry has not been a relevant feature of this industry - especially as it concerns the innovative core and until the advent of the biotechnology revolution - despite low cumulativeness in the process of drug discovery and low levels of concentration. In particular, the paper studies the implications on market structure and innovation of alternative patterns of entry, in terms of number of entrants and timing of entry.