Events

Dr. Minje Park
Postdoctoral Research Scholar
Decision, Risk, and Operations Division
Columbia Business School

Today’s globalized supply chains encounter disruptions due to increased extreme weather events and geopolitical conflicts. For essential goods like infant formula and drugs, supply chain disruptions shift market share away from products under disruption. What is less clear is how long the negative impact on market share will last after a disruption is resolved. Using sales data from the U.S. prescription drug market, we find that supply chain disruptions have a negative impact on market share that persists after disruptions cease. We find that supply chain disruptions lead to an 8-11% reduction in market share after products recover from disruptions, and it takes about an additional 4 months to recover the lost market share, whereas 20% of our sample could not reclaim lost market share within 12 months after supply chains restore. We introduce a new metric of resilience, time to recover market share, to assess factors that mitigate the impact of supply disruptions. Importantly, as supply disruptions last longer, the negative impact on market share gets bigger and takes longer to recover, highlighting the importance of quick supply disruption recovery. Lastly, we find that competing branded (expensive) products immediately take up market share lost to supply chain disruptions, while in the long run, both branded and generic competitors maintain market share gains from competitors’ disruption. Our findings suggest that supply chain disruptions of another product pose an opportunity for competing products to increase market share.