ABSTRACT
This chapter presents the strategic importance of reinforcing feedback processes in the form of network effects and has shown how dynamic model simulations can be used to asses the impact of various New Chemical Entities (NCE) development decisions. The dynamic model can be reparameterized such that the importance of network effect variable takes on some nonzero value. Evaluating the incremental costs and benefits of accelerated NCE development are vital in determining the best pace for developing a compound makes the analysis much more robust. Reinforcing feedback effects are sometimes seen in pharmaceutical markets and represent a “virtuous cycle” in which marketing efforts and word-of-mouth push product acceptance and diffusion beyond conventional expectations. To test the effect of a first-mover advantage, a Dynamic Modeling simulation can be established in which the various strengths of the network effect can be incorporated and the benefits of being first to market can be identified.
