The Roles of Marketing, Product Quality, and Price Competition in the Growth and Composition of the U.S. Anti-Ulcer Drug Industry.

NBER Working paper No. 4904 October 1994 JEL Nos. D43, L65, M3 Industrial Organization, Productivity

The introduction of Tagamet in the United States in 1977 represented both a revolution in ulcer therapy and the beginning of an important new industry. Today there are four Prescription [H.sub.2]-antagonist drugs: Tagamet, Zantac, Pepcid, and Axid. They comprise a multi-billion-dollar market for the treatment of ulcers and other gastric acid conditions.

In this paper, we examine the determinants of sales in this market, using a carefully constructed dataset made possible by IMS America. We concentrate particularly on the marketing of these drugs to physicians through detailing and medical journal advertising. We also make an innovative attempt to distinguish between "industry-expanding" and "rivalrous" marketing...