When the Big One Came: A Natural Experiment on Demand Shock and Market Structure in India's Influenza Vaccine Markets

Arzi Adbi, Chirantan Chatterjee, Matej Drev, Anant Mishra

Research output: Contribution to journalArticlepeer-review

Abstract

This study examines the relationship between exogenous demand shock and market structure in India's influenza vaccine markets. Using a novel dataset of detailed purchasing information for vaccines in India, and exploiting the 2009–10 global H1N1 pandemic as an exogenous demand shock, we provide evidence of heterogeneous responses to the shock by domestic and multinational vaccine manufacturers in the influenza vaccine market relative to our control group of all other vaccine markets. We find that such a shock results in a reversal of the market structure for influenza vaccines in India, with a decline in the market share of multinational vaccine manufacturers and significant gains in the market share of domestic vaccine manufacturers. This reversal of the market structure is driven by increased efforts at new product introduction among domestic vaccine manufacturers, the effects of which persist even after the pandemic has ended. Our results remain robust to the use of alternative controls, synthetic control method, coarsened exact matching method, and other relevant estimation methodologies. These results provide new evidence on the role of a pandemic-induced demand shock in the context of an emerging economy by creating differential incentives for domestic and multinational vaccine manufacturers to bring new products to market. We also conduct additional analysis to explore the impact of targeted policy instruments on the new product introduction efforts of domestic vaccine manufacturers. Finally, we discuss the implications of our findings and offer insights into the role of policy on pandemic preparedness in emerging markets facing adverse welfare effects from pandemics.

Original languageEnglish (US)
Pages (from-to)810-832
Number of pages23
JournalProduction and Operations Management
Volume28
Issue number4
DOIs
StatePublished - Apr 2019

Bibliographical note

Funding Information:
The authors gratefully acknowledge the developmental comments of Nitin Joglekar (Department Editor), the anonymous Senior Editor and the anonymous referees during the review process. We are also indebted to Javier Gimeno for helpful discussions and suggestions in the development of this study. The authors thank Alberto Galasso, Ina Ganguli, Gerry George, Maria Guadalupe, Matthew Higgins, Aseem Kaul, Ilze Kivleniece, Philipp Meyer-Doyle, Phanish Puranam, Subramanian Rangan, Mike Scherer, Melissa Schilling, Jasjit Singh, John Walsh, Keyvan Vakili, and seminar participants at the 2014 Annual REER Conference, 2015 Annual International Industrial Organization Conference, 2015 London Business School Sumantra Ghoshal Conference, 2015 Annual Druid Conference, 2015 Annual AIB Conference, 2017 ISB Max Institute-BU School of Public Health Workshop, 2018 Hitotsubashi Institute of Innovation Research Summer School, and 2018 IIM Ahmedabad Research Seminar Series for insightful comments and suggestions on earlier versions of the manuscript. Chatterjee thanks the ICICI Bank Chair in Strategic Management at IIM Ahmedabad, the Bharti and Max Institute Research Fellowship at the Indian School of Business, and the Young Faculty Research Chair at IIM Bangalore for research support. Mishra thanks the School of Business at George Mason University for research support.

Funding Information:
The authors gratefully acknowledge the developmental comments of Nitin Joglekar (Department Editor), the anonymous Senior Editor and the anonymous referees during the review process. We are also indebted to Javier Gimeno for helpful discussions and suggestions in the development of this study. The authors thank Alberto Galasso, Ina Ganguli, Gerry George, Maria Guadalupe, Matthew Higgins, Aseem Kaul, Ilze Kivleniece, Philipp Meyer-Doyle, Phanish Pura-nam, Subramanian Rangan, Mike Scherer, Melissa Schilling, Jasjit Singh, John Walsh, Keyvan Vakili, and seminar participants at the 2014 Annual REER Conference, 2015 Annual International Industrial Organization Conference, 2015 London Business School Sumantra Ghoshal Conference, 2015 Annual Druid Conference, 2015 Annual AIB Conference, 2017 ISB Max Institute-BU School of Public Health Workshop, 2018 Hitotsubashi Institute of Innovation Research Summer School, and 2018 IIM Ahmedabad Research Seminar Series for insightful comments and suggestions on earlier versions of the manuscript. Chatterjee thanks the ICICI Bank Chair in Strategic Management at IIM Ahmedabad, the Bharti and Max Institute Research Fellowship at the Indian School of Business, and the Young Faculty Research Chair at IIM Bangalore for research support. Mishra thanks the School of Business at George Mason University for research support.

Publisher Copyright:
© 2018 Production and Operations Management Society

Copyright:
Copyright 2019 Elsevier B.V., All rights reserved.

Keywords

  • demand shocks
  • emerging economy
  • influenza
  • natural experiment
  • new product development
  • public policy

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