Question

why it's important for Pharmaceutical companies invest at high scale in the development, trial, production, distribution and marketing of innovative medications that are protected by a patent? give me some great examples on these factors make this particular drug very costly to patients and insurance companies; therefore, they have a high inelastic demand percentage.

Answer 1

There's an advantage in the pharma industry where the elasticity of demand is quite low or in other words, though there's a huge increase in the price of a product,, the quantity demanded will qill remain almost the same as medicines are the ones which come under necessities. Therfore if the pharmaceutical companies indeed invest invest at high scale in the development, trial, production, distribution and marketing of innovative medications that are protected by a patent can get to accumulate huge amount of profits and this is becausethe high inelasticity of demand make their profits higher and higher when compared to that of the investment on the whole.