When Do Firms Provide Early Access?
Evidence from Expanded Access in the Oncology Drug Market, 1990-2020
Abstract
While a growing number of firms provide early access to their innovative products before commercialization (i.e., before developing a full-blown product), we have a limited understanding of providing early access. We take an early step to explore when and why some firms are more likely to provide early access than others. On the one hand, early access could allow potential customers to learn about products before commercialization, speeding up the entry timing. On the other hand, products that are under the R&D process have more technological uncertainties than fully-developed products. We investigate three factors that can affect the balance between benefits from early entry and costs from greater uncertainties in the context of the oncology drug market 1990-2020. First, we argue that entrepreneurial firms will be less likely to provide early access because they are more likely to lack the required resources for deploying early access. Second, we argue that firms will be less likely to provide early access to a first-mover product than a latecomer product because a first-mover product tends to bear more uncertainties than a latecomer product. Third, we argue that firms will be more likely to provide early access to products if they receive a regulatory certification because receiving such certification eases uncertainties perceived by consumers. Our empirical analysis provides supporting evidence for our key arguments.
Keywords: Early Access, Uncertainty, Competition, Regulatory Certification, Entrepreneurial firms, Complementary assets
Sungyong Chang 