Change in Patent Regime And The Role of Branded and Generic Drugs On Price and Quantity: Evidence from the Indian pharmaceutical industry 1995-2009
By Anand Nandkumar, Shantanu Dutta, Madhu Viswanathan, Arnab Choudhury
Citation
Nandkumar, Anand., Dutta, Shantanu., Viswanathan, Madhu., Choudhury, Arnab. (2024). Change in Patent Regime And The Role of Branded and Generic Drugs On Price and Quantity: Evidence from the Indian pharmaceutical industry 1995-2009 .
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2024
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Abstract
We explore how the strength of patents influences the mix of innovative and imitated products in a market and how such changes roll up and influence the prices and the quantity consumed in those markets. Using a natural experiment in the Indian pharmaceutical industry in which product patents were reintroduced in 18 disease categories at different points in time, we make two contributions to the literature that links the strength of patents with competition. Our study suggests that due to its effect on creating isolating mechanisms, stronger patent regimes increase the introduction of innovative products. It also stimulates imitation and increases the growth of imitated products. The net effect of such increases is that stronger patent regimes increase the market share of innovative products. Due to a preference for innovative products, despite the increase in the market share of the more expensive innovative products, both the market prices and the quantity consumed are higher after the reintroduction of product patents. Our findings thus highlight the under-appreciated fact that the effect of patent regimes on market prices and the quantity consumed is contingent upon how the product composition in a market changes and the underlying preferences for innovative versus imitated products.

Anand Nandkumar is a Professor of Strategy, Executive Director of SRITNE at the Indian School of Business (ISB), and Associate Dean of the Centre for Learning and Teaching Excellence. He explores industry and firm-level phenomena that influence innovation - the generation of new ideas, and entrepreneurship - distribution and commercialisation of new ideas. His research focuses on high-technology industries such as pharmaceuticals, biotechnology, and software, and it falls in between industrial organisation (IO), economics of technological change, and strategy.

Professor Nandkumar’s current work in the innovation stream examines the effect of stronger intellectual property rights (IPR) on different aspects of innovation, such as the influence of stronger patents on long run incentives for innovation or the influence of stronger patents on the functioning of Markets for Technology (MFT). In the entrepreneurship stream, his current work examines the influence of venture capitalists on entrepreneurial performance.

Professor Nandkumar graduated with a PhD in Public Policy and Management, with a focus in strategy and entrepreneurship from Carnegie Mellon University in 2008. Prior to his PhD, he worked for 3 years with a startup in Silicon Valley, and prior to that, in New York City with one of the world’s largest financial services firms.

True to his expertise, at ISB, Professor Nandkumar teaches Strategic Innovation Management and Strategic Challenges for Innovation-based startups.

Anand Nandkumar
Anand Nandkumar

Madhu Viswanathan is Associate Professor of Marketing at the Indian School of Business (ISB) and Executive Director of the Srini Raju Centre for IT and the Networked Economy (SRITNE). His research examines how emerging technologies reshape markets and how firms, platforms, and policymakers can design institutions that foster innovation, trust, and sustainable economic growth.

Working at the intersection of marketing, economics, strategy, and information systems, his research seeks to understand how technological change transforms consumer behaviour, organizational incentives, market design, and public policy. He studies how technologies such as artificial intelligence, digital platforms, creator ecosystems, and data-driven decision systems influence the way markets function and evolve. Across these diverse settings, his work aims to develop insights that help organizations respond to technological change with strategies that are both economically effective and socially meaningful.

His research has been published in leading journals including the Journal of Marketing Research, Marketing Science, and the Journal of Economics & Management Strategy. He serves on the Editorial Review Boards of the Journal of Marketing Research and Production and Operations Management and has been recognized with the Outstanding Reviewer Award from the Journal of Marketing Research.

As Executive Director of SRITNE, Madhu leads the Centre’s research and engagement on artificial intelligence, digital markets, and technology-enabled growth. Under his leadership, SRITNE is building a multidisciplinary research agenda around AI, digital platforms, creator economies, and emerging technologies while strengthening collaborations across academia, industry, startups, and government. His vision is to position the Centre as a leading hub for research that bridges technological innovation with business strategy and public policy.

Alongside his research, he teaches MBA, doctoral, and executive education programmes on growth strategy, digital marketing, artificial intelligence, and technology-enabled business. His teaching combines rigorous research with practical decision frameworks that help managers navigate growth, digital transformation, and strategic decision-making in rapidly evolving markets.

Beyond academia, Madhu serves as an independent director and advisor to technology ventures, working with organizations on growth strategy, platform businesses, AI adoption, digital transformation, and technology-enabled market design. His advisory work reflects his broader commitment to translating rigorous academic research into practical solutions for business leaders, entrepreneurs, and policymakers.

Prior to joining ISB, he was on the faculty at the University of Arizona. He received his PhD in Marketing from the University of Minnesota and his undergraduate degree from BITS Pilani. His work seeks to bridge rigorous academic research with business practice and public policy, helping organizations harness emerging technologies to build more innovative, efficient, and inclusive markets.

Prof Madhu Viswanathan
Madhu Viswanathan