Patent Protection, Transnational Corporations, and Market Structure: A Simulation Study of the Indian Pharmaceutical Industry

This study examines the role of patent protection on the behavior of transnational corporations and market structure in the Indian pharmaceutical industry. The method of analysis is the calibration of a theoretical model to firm-level data from two therapeutic groups of the Indian pharmacy market, and a simulation analysis asking the hypothetical question of what the market structure would be if India granted patent protection to pharmaceutical products. The model developed for the simulation analysis explicitly accounts for the complex demand structure for pharmaceutical goods that results from the presence of therapeutic substitute drugs, and product differentiation among chemically equivalent drugs.