Abstract
The process of innovation in the pharmaceutical industry is full of uncertainty. It requires not only a great deal of capital and time for research but also accurate strategy and efforts to commercialize the R&D result. A newly developed and commercialized medicine is very easy to be duplicated by modern analytical technology into a counterfeit drug, which is detrimental to both the innovators’ operational performance and the users’ health. This research is conducted on the basis of “Diffusion Theory” to explore the process of innovative pharmaceutical product diffusion. This study uses the sale of Viagra in Taiwan as an example and regards the illegal drug as the other brand and its case to compete, replace and interact with the originally developed medicine and estimates the impact of the counterfeit drug in the parameter model. This study has found that “media” and “word-of-mouth” are the key factor in the fast Viagra diffusion in the Taiwan pharmaceutical market while the marketing efforts are the secondary impact factor. In this paper, we also discuss the economic and strategic meaning of the parameter for the innovator’s responding strategies to the counterfeit medicine.