Does competition drive lower prices?

Nov 30, 2023 | General

Wavedata looked at the average prices of generic products sold to pharmacies and dispensing doctors between August and October 2023 and compared this with the number of price list offers for the same products in the same time period.

It would seem sensible to assume that lots of competitive market offers would drive competition between wholesalers and manufacturers, and this is more or less what we found.

On the horizontal axis of the graph we have large numbers of offers for very low priced products, and the vertical axis shows the small numbers of offers for more expensive products. However the vast majority sit somewhere in the middle, with medium prices matching with medium number of market offers.

Therefore it appears that competition between market players does drive prices down, but many products have their prices controled by factors other than competition, for example transport costs, raw material availability and labour rates.

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