Early-Stage Pharmaceutical Market Structures Between Originators and First Generics After Introducing the Patent Linkage System in South Korea

Abstract

This study describes the characteristics of early-stage market structures between originators and first generics, analyzes factors influencing early-stage market structures, and suggests policy options to enhance market competition under the patent linkage system. Information on the active substances in originators and their corresponding generics that entered the market through the first generic exclusivity from 2015 to 2020 were retrieved. Logistic regression models were applied to elucidate the factors that determine the early-stage market structure. Forty-four pairs were identified as having generics that entered the market. Various market structures were observed upon entering the first generics. Prolonged market exclusivity for originators was shown to be linked to limited competition even after the market entry of generics. The changed behaviors of generic manufacturers were observed. Manufacturers have adopted independent market entry strategies to be granted first generic exclusivity instead of collaborating with others. Disclosing lists of originators in monopolistic markets and their ongoing exclusivity terms is required. The government could support manufacturers in adapting to the patent linkage system by providing information on patent challenges and disputes. Policy measures to enhance generic uptakes would incentivize manufacturers to be the first generic manufacturers.

Keywords: South Korea; market exclusivity; market structure; patent challenges; patent-linkage system.