Say you are doing an analysis for a potential new drug. You calculate a mean lifetime net present value of customer spend, if prescribed, of $18,000 and also get a 95% confidence interval of $10,000 to $25,500. There is an estimated potential for 150,000 customers. Although R&D has been completed, the drug production will have further initial development cost of $800million and production costs per customer of $5,000. Answer the following questions with regard to this scenario.

Calculate the mean estimated profit from this scenario, estimated to zero decimal places (4 marks)

What is the highest profit in this scenario with your given confidence? (2 marks)

Which of the following is true:

This analysis indicates we will make a profit from this drug

This analysis indicates that we should not launch the drug

We can feasibly make a loss with this drug, and if so it would be a big loss

We can feasibly make a loss with this drug, but if so it would be a relatively small loss compared to the potential gain (1 mark)

At what customer lifetime spend do we break even? (4 marks)

Given that return on investment is Profit / Cost, what would the drug’s estimated ROI be at mean values of profitability? (4 marks)