Reliable forecasts of brand sales are fundamental to a value based evaluation of R&D projects in the pharmaceutical industry. The paper describes a cross sectional and time series analysis of sales data over one decade in four major segments of the market for cardiovascular drugs. The seven leading countries except for Japan are covered in the study. We estimate over 200 product life cycles using a very flexible mathematical model to account for a variety of PLC shapes. Life cycles are then clustered on the basis of estimated regression coefficients. As a result this analysis leads to the detection of an international product life cycle classification. This typology gives useful insight into the success and market determinants in the segments under investigation. Moreover, it turns out that the order of entry is not only crucial to achieve a certain market share level but also to the shape of the drug life cycle. The paper provides first findings on this subject. Consequences for the economic evaluation of innovative products are drawn according to their prototypical life cycle. In this context we conduct a simulation study to show the impact of the PLC shape on the net present value. Management implications on effective R&D strategies in the light of cost containment efforts are shown at the end.
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