Question: In a 2013 article, Forbes.com reports that the average cost of creating a new drug is now a few billion dollars. The price is so

In a 2013 article, Forbes.com reports that the average cost of creating a new drug is now a few billion dollars. The price is so high because its hard to create a drug thats both effective and safe. Indeed, 95% of drugs companies test end up failing at least one of those criteria. And each of these failed drugs cost the company $350 million.[1] Of course, drugs that make it to market may not be successful. Using the provided information, what is the expected value of a new drug (before it is known if the drug is effective and safe)? Remember to show your work.

Performance in the market is	%	Profit (millions)
Astonishing	60%	$10,000
Standard	30%	$3,000
Terrible	10%	$200

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related General Management Questions!

1. Drawing on your knowledge of the PESTEL model , analyse the external environment facing the pharmaceutical industry and identify the key external factors which impact on the company. (Case Study...

1. Using examples from the case study critically examine the 5 forces which establish the rivalry in the global pharmaceutical industry. 2. Using examples from the case study critically examine the...

Q1. What are the advantages of an IPO rather than continuing with VC funding or entering a collaborative agreement with a major pharmaceutical company? Be specific to this case, not a general list....

07-043 March 13, 2008 Eli Lilly: Recreating Drug Discovery for the 21st Century Rebecca Henderson and Cate Reavis The rise of personalized medicine is one of the most important developments in health...

I need help to figure out the Situation Analysis External and Internal for the Pfizer Case Return on Assets '16 I 4.13 I Financial Leverage (Average) I 2.59 I Return on Equity% I 10.24 I Return on...

PAR T CASES Case 1-1: Pfizer and the Challenges of the Global Pharmaceutical Industry* Introduction-Pfizer The general changes and industry developments worried many pharmaceutical managers. One area...

please answer based information below. 1.SBU-level strategies of pfizer? Marketing strategies (including Porter's generic strategy, target market, positioning, perceptual maps) Financial strategies...

please answer based on the information case below 1. what is the primary competitors of Pfizer? - what are they doing - what they will do moving foward - what they think of pfizer 2.what is industry...

Please answer the question based on the case study below ! 1. what are the most important strategic benefits that Pfizer derives from it's vertical Integration strategy? 2. over the long term, how...

What is the normal balance of the account Discount on Bonds Payable? Is it added to or subtracted from the Bonds Payable account to determine the carrying amount?

In California, property values are reassessed only after a sale has taken place. For proper-ties that have not been sold in the past year, the law allows only a small increase in the assessed value....

As the manager of Smith Construction, you need to make a decision on the number of homes to build in a new residential area where you are the only builder. Unfortunately, you must build the homes...