In this paper we present a model of the long term dynamics of market structure and innovation in the pharmaceutical industry in a history friendly way. Our results show a strong increase in concentration in each therapeutic area, but a rather low level of concentration in the overall market.
Innovative firms continue to maintain a key role.
We have also explored different situations of patent protection. As expected, an increase in patent protection increase concentration but decreases exploration, while the opposite holds for no patent protection. Interestingly enough, an increase in patent protection is not able to countervail the negative effects of no growth in demand as far as quality and exploratory activities are concerned.