Abstract:

Characterisation of the structure of the pharmacy distribution channel of the Italian drug market by means of a large sample (672 different preparations of 497 pharmaceuticals produced by 135 Italian and foreign drug companies). The sample, witch consists of the products enjoying the largest market, represents 56% of the total number of sales and 62% of the total value of the market. Composition of the market and sales distribution in terms of numerical classes (i.e. number of preparations sold per annum) and retail price classes. The analysis brings out very clearly not only the market predominance of drugs in the low and medium-price range, but also the inverse relationship between price and quantity (quantities sold diminish as the price increases, and vice versa). Reconstruction (by means of computer simulation) of the costs that the price formation method recognizes for each preparation. Discussion of the distortions in the theoretical cost structure: the method overvalues some of the costs of low-priced products and, vice versa, tends to underestimate the costs associated with products in the medium and high price range. Analysis (on the assumption of constant quantities sold) of the market changes induced by the 1984 price revision: the structure of the price formation method generates retail price increases mainly among low-priced products.