We study the short- and long-term price effects of the number of competing firms, using panel-data on 1303 distinct pharmaceutical markets for 78 months. We use actual transaction prices in an institutional setting with little room for non-price competition and where simultaneity problem can be addressed effectively. In the long term, the price of generics is found to decrease by 81% when the number of firms selling generics with the same strength, form and similar package sizes is increased from 1 to 10. It is nearly only competition on this fine-grained level that matters. For example, the price effect of firms selling other products with the same active substance, but with different package size, form, or strength, is only a tenth as large. Half of the price reductions take place immediately and 70% within three months. Also, prices of originals are found to react to competition, but far less and much slower; going from 1 to 10 firms selling nearly identical generics reduces prices by 29% in the long term but by only 2% in the short term.