Academic SeminarToo much, too late: Why do pharmaceutical firms increase their direct-to-physician promotions over time?
- 2019-04-11 ~ 2019-04-11
- Building 9, 3th #9303
- School of Management Engineering
We would like to invite you to participate in Management Engineering (ME) Seminar.
1. When: April 11th (Thursday), 16:00 ~ 17:30
2. Where: Building 9, 3th #9303
3. Speaker: Prof. Sungjoon Nam (The State University of New York, Korea)
4. Topic: Too much, too late: Why do pharmaceutical firms increase their direct-to-physician promotions over time?
5. Research field: Marketing
* Lecture will be delivered in Korean.
The pharmaceutical industry is well known for its enormous marketing expenditures, particularly on direct-to-physician promotions, also known as detailing. Whereas previous studies have typically concluded that firms should start with a high level of detailing and decrease those activities over time, we find that actual detailing activities do not follow the predicted down-sloping pattern but rather the opposite. Our unique data set (IMS Spectra data) shows that firms’ detailing activities increased over time for approximately 40% of 464 drugs. This study sheds light on that discrepancy and the underlying reasons for it. We find that firms show increasing patterns of detailing activities when it takes longer to learn about a drug’s efficacy and when uncertainty concerning future sales is higher. Of interest to policymakers, our results reveal that increases in detailing activity are not driven by excessive competition among pharmaceutical firms. Rather, increases in detailing activities are associated with the approval of drugs for new indications, which help to inform physicians’ decisions about prescriptions.