Modeling competition between two pharmaceutical drugs using innovation diffusion models

The study of competition among brands in a common category is an interesting strategic issue for involved firms. Sales monitoring and prediction of competitors’ performance represent relevant tools for management. In the pharmaceutical market, the diffusion of product knowledge plays a special role, different from the role it plays in other competing fields. This latent feature naturally affects the evolution of drugs’ performances in terms of the number of packages sold. In this paper, we propose an innovation diffusion model that takes the spread of knowledge into account. We are motivated by the need of modeling competition of two antidiabetic drugs in the Italian market.