Impact of South Korea's 2012 Drug Price Reduction Policy on Pharmaceutical Firms' Product Portfolio

초록

This study analyses the impact of the 2012 drug price regulation on pharmaceutical firms' product portfolio by employing a firm-specific measure of exposure and a robust difference-in-difference analysis. The empirical findings show that firms exposed to the price cut experienced a 7% to 60% decline in self-manufactured drug sales. On the other hand, revenues from co-promoted imported original drugs, which were exempt from the regulation, increased. This shift suggests the price reduction induced firms to scale back sales in less profitable self-manufactured products, possibly weakening South Korea's domestic drug production capacity.

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