We analyze the relationship between firms’ ability to leverage regulatory slack and their market entry strategies. Using newly constructed genomic measures of disease market similarity, we systematically document evidence of forum shopping, whereby pharmaceutical firms seek the most lenient regulatory environment for approval when drugs have multiple potential therapeutic uses. Firms seek regulatory approval in smaller disease markets to lower the costs of regulation and rely on complementary, non-regulatory pathways - in the form of unapproved, “off-label” drug use - to expand demand. Our data allow us to characterize the degree to which new technologies can exploit such opportunities, shedding light on how firms navigate regulatory environments to speed the entry of new products to market.
Ansprechpartnerin: Elisabeth Hofmeister
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