Pharmaceutical Drug Market

It would seem that the market for pharmaceutical drugs is a monopolistically competitive one. It is stated that in a monopolistically competitive market, firms thrive on supporting the differences in their products, and that the differences is products can be very little, very large or even just a perceived difference. It most cases, generic drugs contain the exact same ingerdients, and have the same effect as the name brand drugs that sell at a much higher price. What drives the name brands is their reputation as a company. The name “Advil” will appeal more to consumers than the generic “Ibproufen”. The same goes for prescription drugs. Personally, I have a child who grew up getting chronic ear infections. Being that she is allergic to penicillin, and amoxicillin, the only option for her was the antibiotic Zithromax. At the time, there was no generic version of this drug. We were stuck paying higher prices for this drug that there was no alternative for. Two years later, a generic version was released, and the price was significantly lower. Research and development is extremely important in the world of medication. All over the world, many universities, and other private companies receive a lot of money to research new drugs. Many of the drugs that have helped many people enjoy better lives were a result of research and development. Obviously, not all drugs pay off. Some never make it out of the lab, others never make it past the FDA. Strategic behavior is important in every market. Knowing what the demand is for a product, and knowing when and who to release it is important. Knowing what the competition is doing, and knowing how to optimize your own share of the market is of the utmost importance. Product differentiation is also important in all markets, but especially in the drug market. Again,