Dresden Pharmaceuticals has decided to go ahead and start cl

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.

Calculate the market share percentage in the third year.

Solution

market share percentage of Dresden in first year is 7%

the growth of market share is 25%

market share percentage of dresden in second year = 7% * (1 + 25%) = 8.75%

again

market share percentage of dresden in third year = 8.75% * (1+25%) = 10.9375% ...............ans