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 projected sales for the first year.

Solution

market size in first year = 3,000,000

market share of dreden in first year = 3,000,000 * 7% = 210,000

monthly revenue from prescription = 420

so annual revenue per prescription = 420 * 12 = 5,040

projected sales of first year = 210,000 * 5,040 = $1,058,400,000 ...............ans