Heterogeneity Analysis


Through a heterogeneity analysis, we aim to uncover how specific drug characteristics influence DPCO 2013’s effects on sales volumes. The characteristics analysed include:

  1. Acute vs. Chronic

Drugs are categorized based on their typical use for acute or chronic conditions. For example, Albendazole 400mg is for acute conditions like worm infections, while Amlodipine 25mg treats chronic conditions like hypertension. Our hypothesis suggests SKUs for acute ailments might experience a more significant sales decline post-regulation.

  1. CPGPRx%

We consider the percentage of prescriptions by Clinical Practitioners (CPs) and General Practitioners (GPs) before the regulation. Drugs predominantly prescribed by specialists, who have fewer alternative medication options, are expected to see a lesser decline in sales.

  1. Sales % from Tier 1 and Tier 2 Cities

We include data on the percentage of pre-regulation sales originating from Tier 1 and Tier 2 cities. Differences in access, purchasing power, and awareness could affect the sales impact of DPCO 2013.

  1. Price Reduction

We calculated a market-weighted average price cut for the top 5 brands per SKU to assess how significant price reductions influence sales volumes. A larger price cut is hypothesized to result in a higher decline in sales.

  1. Detailing Effort

A detailing index, based on the presence of a brand in the detailing booklet used by medical representatives, was created to gauge the relative marketing efforts for each SKU. This index helps to understand if and how pre-regulation detailing efforts impacted the sales outcomes post-regulation.

Results of Heterogeneity Analysis

Explanatory variables Dependent variable: Treatment Effect (and standard errors) of regulation for each SKU
Acute (1=yes) -527,096** (230,318)
% price reduction -294,023** (119,346)
CPGPRx% -436,692** (202,533)
Tier 1-2 sales % -409768 (677,750)
Detailing index -2,014,529 (1,400,990)
Intercept 4,126,284* (2,371,997)
Observations 179
R-squared 0.442
Molecule FE Yes

Robust standard errors in parentheses *** p<0.01, ** p<0.05, * p<0.1
FE refers to fixed effects
Fixed effects for molecule: To account for multiple SKUs (eg. Acyclovir 200mg and Acyclovir 400mg) from same molecule (Acyclovir). Molecules refer to medications such as Atorvastatin, brands of this molecule are Atorfit, Cholestat, Lipivas etc., and SKUs (stock keeping units) refer to the final medicinal product or formulations, e.g. Atorvastatin 10 mg.