Factors Associated with the Generic Drug Life Cycle

The generic drug market has experienced extensive growth in the United States in the last few decades. This has meant a more prominent role for generic prescriptions in medical treatment and in the debate on health care expenditures. The interest has translated to extensive research on the generic prescription market in terms of entry and pricing. On the other hand, there has been less analysis of exit from the generic market as well as market duration. This paper aims to examine factors that are related to product exit from the generic market and to provide estimates on duration in the industry. The results show that market level variables such as size, number of competitors and the presence of authorized generic products are important in the likelihood of exit from the generic market. In terms of market duration, the estimates indicate that the median time in the market for a generic product is approximately 13 years