Question

You are the manager of a small pharmaceutical company that received a patent on a new...

You are the manager of a small pharmaceutical company that received a patent on
a new drug three years ago. Despite strong sales ($150 million last year) and a low
marginal cost of producing the product ($0.50 per pill), your company has yet to show
a profit from selling the drug. This is, in part, due to the fact that the company spent
$1.7 billion developing the drug and obtaining FDA approval. An economist has estimated
that, at the current price of $1.50 per pill, the own price elasticity of demand for
the drug is –2. Based on this information, what can you do to boost profits? Explain.

No textbook answer please

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
You are the manager of a small pharmaceutical company that received a patent on a new...
You are the manager of a small pharmaceutical company that received a patent on a new drug three years ago. Despite strong sales ($150 million last year) and a low marginal cost of producing the product ($0.55 per pill), your company has yet to show a profit from selling the drug. This is, in part, due to the fact that the company spent $1.6 billion developing the drug and obtaining FDA approval. An economist has estimated that, at the current...
You are the manager of a small pharmaceutical company that received a patent on a new...
You are the manager of a small pharmaceutical company that received a patent on a new drug three years ago. Despite strong sales ($225 million last year) and a low marginal cost of producing the product ($0.70 per pill), your company has yet to show a profit from selling the drug. This is, in part, due to the fact that the company spent $1.3 billion developing the drug and obtaining FDA approval. An economist has estimated that, at the current...
You work for a pharmaceutical company that has developed a new drug. The patent on the...
You work for a pharmaceutical company that has developed a new drug. The patent on the drug will last 17 years. You expect that the​ drug's profits will be $ 5 million in its first year and that this amount will grow at a rate of 5 % per year for the next 17 years. Once the patent​ expires, other pharmaceutical companies will be able to produce the same drug and competition will likely drive profits to zero. What is...
You work for a pharmaceutical company that has developed a new drug. The patent on the...
You work for a pharmaceutical company that has developed a new drug. The patent on the drug will last 1717 years. You expect that the​ drug's profits will be $ 4$4 million in its first year and that this amount will grow at a rate of 5 %5% per year for the next 1717 years. Once the patent​ expires, other pharmaceutical companies will be able to produce the same drug and competition will likely drive profits to zero. What is...
You work for a pharmaceutical company that has developed a new drug. The patent on the...
You work for a pharmaceutical company that has developed a new drug. The patent on the drug will last 17 years. You expect that the​ drug's profits will be $ 1 million in its first year and that this amount will grow at a rate of 4 % per year for the next 17 years. Once the patent​ expires, other pharmaceutical companies will be able to produce the same drug and competition will likely drive profits to zero. What is...
2) You work for a pharmaceutical company that has developed a new drug. The patent on...
2) You work for a pharmaceutical company that has developed a new drug. The patent on the drug will last 17 years. You expect that the​ drug's profits will be $4 million in its first year and that this amount will grow at a rate of 6% per year for the next 17 years. Once the patent​ expires, other pharmaceutical companies will be able to produce the same drug and competition will likely drive profits to zero. What is the...
XYZ Pharmaceutical, Inc. just got FDA approval for their new drug, Viagrina. The company has never...
XYZ Pharmaceutical, Inc. just got FDA approval for their new drug, Viagrina. The company has never paid a dividend, but they expect to pay one for the first time by the end of the year. The expected dividend is $3.00 per share and the company expects that dividend to increase at a rate of 20% for five years. After that, XYZ expects to see its dividend growth limited by the growth rate the US economy, which on average is 4.5%...
1A) You are managing a pharmaceutical company that makes a patent-protected drug. According to your calculations,...
1A) You are managing a pharmaceutical company that makes a patent-protected drug. According to your calculations, at the current level of production the marginal revenue of one unit of the drug is less than the marginal cost of producing that unit. To maximize your profit, should you increase, decrease, or maintain the current level of production? Explain your answer. 1B)Australian yogurt is a new product that is not strained and is made from whole milk, so it is creamier than...
1.A pharmaceutical company has already spent 1 million dollars in research for a new drug and...
1.A pharmaceutical company has already spent 1 million dollars in research for a new drug and now has to make a decision. The company can either terminate the research program or it can move to the development phase. If the company moves to the development phase, it has to invest another 1 million dollars today to start producing and selling the new drug. However, once the company begins producing and selling the new drug, it expects to make 150,000 dollars...
34)EZJOINT. After spending 10 years and S1.5 billion, you have finally gotten Food and Drug Administration...
34)EZJOINT. After spending 10 years and S1.5 billion, you have finally gotten Food and Drug Administration (FDA) approval to sell your new patented wonder drug, which reduces the aches and pains associated with aging joints. You will market this drug under the brand name of EZjoint Market research indicates that the demand elasticity for EZjoint is-1.25 (at all points on the demand curve). You estimate the marginal cost of manufacturing and selling one more dose of EZjoint is S1. (a)...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT