Hongju Liu will be presenting his research on advertising spillovers in the pharmaceutical industry. This research will be of interest to faculty across departments and those interested in healthcare and marketing. Please join us!
The presentation is on May 2nd from 11:45 a.m. - 12:45 p.m. in the Business Lounge on the 1st floor following the faculty meeting. Lunch will be provided with support from the dean’s office. If you are planning to attend, please RSVP to Tina Pierce by utilizing the voting buttons above or by sending an email by Wednesday, April 30th. Please indicate in your response if you require a vegetarian boxed lunch or have other dietary restrictions.
Advertising Spillovers: Drug Detailing in Combination Therapy
Abstract:
A growing literature has investigated various sources of advertising spillovers. Spillover can be across markets within a brand, across related brands within a firm, across rival brands, and across media and channels. Using the empirical context of combination therapy in the pharmaceutical industry, we examine advertising spillovers when products from different firms are consumed as a bundle. With data from the HIV/AIDS category, we first provide reduced-form evidence for the nature of relationships that exist among the various drugs. We then estimate a formal hierarchical Bayesian logit model across treatment regimens to investigate how the detailing effort for one drug spills over to related drugs. Spillover effects create a tradeoff for the firm – increased detailing of one’s own drug benefits sales of that drug but also those of other drugs in the combination. The latter effect could lead to free riding by the drug benefitting from the spillover. We numerically solve a dynamic oligopoly detailing game to study this tradeoff and firms’ optimal detailing strategies. We focus on situations in which firms have incentives to free ride on others’ detailing efforts, and examine how the incentive for free riding is affected by regulations and market structure.
For more information, contact: Tina Pierce at Tina.Pierce@business.uconn.edu