Analysis of Competition in the Market of Public Procurement of Medicines

In this study, we analyze competition in the market of public procurement of medicines in Russia between brand and generic, in order to identify factors, which has influence on the price change with the appearance of generics. We base our estimates on a data sample of 30 brand‐name drugs that first experienced generic competition during the period 2012–2014. We find that appearance of generic has nonlinear influence on market price of drugs. In addition, we find that number of distributors determines the market price on the market of public procurement. Thus, if you pursue a policy aimed at minimizing prices and stimulate competition, you need to take into account influence not just number of producers but number of distributors. In addition, we find that the size on the public procurement market of medicines influences on the dynamic of generics registration, the greater the volume of sales on the market at the time of the appearence of generics the faster generic entries.