Use the Table Below to Answer the Following Questions) -Calculate the Projected Sales for the First Year

question 60

Multiple Choice

Use the table below to answer the following questions) .
Dresden Pharmaceuticals has decided to go ahead and start clinical trials on a potential new drug. The total R&D costs are estimated to reach around $875,000,000 with clinical trials mounting to
$145,000,000. The current market size is estimated to be around 3,000,000 and is expected to grow at 4 percent every year. The market share Dresden hopes to capture in the first year is 7 percent, and is projected to grow by 25 percent each year for the next 4 years. A monthly
prescription is anticipated to generate revenue of $420 while incurring variable costs of $150. A discount rate of 8 percent is assumed. $$\begin{array} { | l | l | } \hline \text { Dresden Pharmaceuticals } & \\\hline & \\\hline \text { Data } & \\\hline & \\\hline \text { Market Size } & 3,000,000 \\\hline \text { Unit monthly Rx) revenue \$) } & 420 \\\hline \text { Unit monthly Rx) cast \$) } & 150 \\\hline \text { Discount Rate per cent) } & 8 \\\hline & \\\hline \text { Project Costs } & \\\hline \text { R\&D \$) } & 875,000,000 \\\hline \text { Clinical Trials \$) } & 145,000,000 \\\hline & \\\hline\end{array}$$
-Calculate the projected sales for the first year.

• A) 273,000
• B) 210,000
• C) 378,000,000
• D) 268,230

---

Definitions:

Industry

The production of goods or services within an economy that is characterized by a specific focus, such as technology, finance, or manufacturing.

Firm(s)

Organizations involved in the production and distribution of goods or services to consumers in a market.

Price-Fixing

A practice where businesses agree on the price levels of their products or services, rather than letting competition in the market determine them, often deemed illegal.

Market-Sharing Agreements

Arrangements between companies to divide markets or customers to avoid competition.