Company has yet to show profit from selling the drug

Assignment Help Business Economics

Reference no: EM131104309

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 with proper calculations.

Reference no: EM131104309

Questions Cloud

The stolper-samuelson theorem states : The Stolper-Samuelson theorem states that: A) free international trade increases the real income of the nation's relatively scarce factor and the nation's relatively abundant factor. B) free international trade increases the real income of the nation..

Bjorn is trying to prepare monthly financial statements : At the end of the month he had not yet received the month's utility bill. Based on past experience, he estimated the bill would be approximately $600.

What is his explanation for why we did not expand medicare : Why does Krugman call Obamacare “The Big Kluge”? What is his explanation for why we didn’t expand Medicare? What do the two interest groups – the currently insured and the Insurance Industry have in common?

Why is corporate finance important to all managers : We sometimes need to find how long it will take a sum of money (or anything else) to grow to some specified amount. For example, if a company's sales are growing at a rate of 20 percent per year, how long will it take sales to double?

Company has yet to show profit from selling the drug : 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 ..

Supplemented by the uncovered interest parity condition : Use the open economy IS-LM model supplemented by the uncovered interest parity condition. If a nation with flexible exchange rates wanted to expand real GDP while avoiding a trade deficit, should it rely on fiscal policy or monetary policy? Illustrat..

International marketing-currency flows-exchange rates : Write a short essay (about 25 words) on the opportunities and challenges of international marketing - List and explain four factors that determine market characteristics - Explain the following terms IN YOUR OWN WORDS o Political Risk o Gray market o..

Why is corporate finance important to all managers : What is the future value of an initial $100 after 3 years if it is invested in an account paying 10 percent annual interest?Why is corporate finance important to all managers?

Industry increase the economic profits of the existing firms : Why does the entry of firms into an industry decrease the economic profits of the existing firms? Why does the exit of firms from an industry increase the economic profits of the existing firms?

User Account

All Pages