Brand Name Drug Industry Dynamics Market approval in the US for new pharmaceutical products is a long, arduous, and expensive process. Once approved, patent protection keeps close substitute products from entering for some years. If the demand for a particular product is stable, what would you predict for the profitability after approval and prior to patent expiration?

The prices and profits should be relatively constant over this period. There may be an initial period when the drug maker must inform the potential customers of the benefits of this product that will make demand and prices lower. But, after that, these firms enjoy a stable monopoly.