ORIGINAL RESEARCH article
Front. Public Health
Sec. Health Economics
Volume 13 - 2025 | doi: 10.3389/fpubh.2025.1683074
This article is part of the Research TopicInnovative Value-Based Medicine: Lessons from China's Healthcare EvolutionView all 16 articles
Study on the Relationship between Buyer Market Power, Spatial Spillover Effect, and Profit in China's Pharmaceutical Industry
Provisionally accepted
- 1Harbin Engineering University, Harbin, China
- 2Party School of Heilongjiang Provincial Committee of CPC, harbin, China
Select one of your emails
You have multiple emails registered with Frontiers:
Notify me on publication
Please enter your email address:
If you already have an account, please login
You don't have a Frontiers account ? You can register here
Abstract: Previous studies have extensively explored industrial innovation, but the impact of downstream buyer market power on upstream industries remains underexamined. Using a spatial Durbin model and data from China's medical and pharmaceutical sectors (2001–2021), we analyze how buyer market power affects pharmaceutical industry profitability. Key findings include: (1) Local buyer market power reduces local pharmaceutical profitability and may also negatively affect other regions through spatial spillover, though this spillover effect is weak. (2) Stronger regional economic ties amplify the impact of local medical industry power on pharmaceutical profitability. (3) Supplier countervailing power can mitigate the negative effects of buyer power on pharmaceutical profits. (4) Buyer market power significantly harms pharmaceutical profitability in western China and low capital-intensity sectors, but not in eastern or central regions and high capital-intensity sectors. (5) Asset specificity intensifies the negative impact of buyer power, while larger firm size helps reduce it. (6) Buyers can lower pharmaceutical profitability by reducing R&D investment. This study contributes to industrial organization theory by revealing how downstream buyer power affects upstream profitability. It expands empirical methods by incorporating spatial econometrics and offers policy suggestions for improving pharmaceutical industry performance from a vertical chain perspective.
Keywords: Buyer market power, seller countervailing power, Profit, spatial Durbin model, Spatial spillover effect
Received: 11 Aug 2025; Accepted: 20 Oct 2025.
Copyright: © 2025 Yu, Wu, Chen and Ding. This is an open-access article distributed under the terms of the Creative Commons Attribution License (CC BY). The use, distribution or reproduction in other forums is permitted, provided the original author(s) or licensor are credited and that the original publication in this journal is cited, in accordance with accepted academic practice. No use, distribution or reproduction is permitted which does not comply with these terms.
* Correspondence: Lei Wu, wulei@hrbeu.edu.cn
Disclaimer: All claims expressed in this article are solely those of the authors and do not necessarily represent those of their affiliated organizations, or those of the publisher, the editors and the reviewers. Any product that may be evaluated in this article or claim that may be made by its manufacturer is not guaranteed or endorsed by the publisher.