Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/95875
Authors: 
Duso, Tomaso
Herr, Annika
Suppliet, Moritz
Year of Publication: 
2014
Series/Report no.: 
DICE Discussion Paper 137
Abstract: 
We investigate the welfare impact of parallel imports using a large panel data set containing monthly information on sales, ex-factory prices, and further product characteristics for all 700 anti-diabetic drugs sold in Germany between 2004 and 2010. We estimate a two-stage nested logit model of demand and, based on an oligopolistic model of multi- product firms, we then recover the marginal costs and markups. We finally evaluate the effect of the parallel imports' policy by calculating a counter-factual scenario without parallel trade. According to our estimates, parallel imports reduce the prices for patented drugs by 11% and do not have a significant effect on prices for generic drugs. This amounts to an increase in the demand-side surplus by e19 million per year (or e130 million in total) which is relatively small compared to the average annual market size of around e227 million based on ex-factory prices. The variable profits for the manufacturers of original drugs from the German market are reduced by e18 million (or 37%) per year when parallel trade is allowed, yet only one third of this difference is appropriated by the importers.
Subjects: 
parallel imports
pharmaceuticals
structural models
anti-diabetic drugs
JEL: 
I11
I18
L13
L51
ISBN: 
978-3-86304-136-6
Document Type: 
Working Paper

Files in This Item:
File
Size
921.79 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.