On firm specific characteristics of pharmaceutical generics and incentives to permanence under fuzzy conditions

The aim of this paper is to develop a methodology that is useful for analysing from a microeconomic perspective the incentives to entry, permanence and exit in the market for pharmaceutical generics under fuzzy conditions. In an empirical application of our proposed methodology, the potential towards permanence of labs with different characteristics has been estimated. The case we deal with is set in an open market where global players diversify into different national markets of pharmaceutical generics. Risk issues are significantly important in deterring decision makers from expanding in the generic pharmaceutical business. However, not all players are affected in the same way and/or to the same extent. Small, non-diversified generics labs are in the worse position. We have highlighted that the expected NPV and the number of generics in the portfolio of a pharmaceutical lab are important variables, but that it is also important to consider the degree of diversification. Labs with a higher potential for diversification across markets have an advantage over smaller labs. We have described a fuzzy decision support system based on the Mamdani model in order to determine the incentives for a laboratory to remain in the market both when it is stable and when it is growing.