Genentech Owns a Patent on Tissue Plasminogen Activator (TPA), Which

question 12

Essay

Genentech owns a patent on tissue plasminogen activator (TPA), which is an enzyme that helps the body break down blood clots.TPA is particularly valuable to cardiac patients, since it often allows heart problems to be treated with medication rather than surgery.Recently, however, firms in the medical industry have come under fire by some members of Congress and the press for charging high prices and earning monopoly profits.Do you think cardiac patients would benefit if the government stripped Genentech and other pharmaceutical firms of their patents? Explain.

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Definitions:

Required Return

The minimum profit or yield that investors expect to earn on an investment.

Unit Product Cost

The cost to produce a single unit of product, accounting for direct materials, direct labor, and overhead on a per-unit basis.

Absorption Costing

An accounting method that includes all direct costs and fixed and variable overhead costs in the cost of a product.

Required Return

The minimum rate of return needed from an investment to make it worthwhile for the investor.